Three of the world’s largest cryptocurrency exchanges, Coinbase, OKX and Binance, have announced new partnerships with UK-based firms as the country prepares to implement new regulations for the crypto sector. The partnerships aim to ensure compliance with the Financial Conduct Authority (FCA)’s rules, which will require crypto firms to register with the regulator and follow anti-money laundering and counter-terrorism financing standards.
Coinbase, the US-based exchange that recently went public, has partnered with Archax a challenger bank that provides banking services to fintech companies. Archax will provide Coinbase with access to the UK’s Faster Payments Scheme, which enables instant transfers between bank accounts. This will allow Coinbase to offer faster and cheaper deposits and withdrawals to its UK customers, who currently have to use international wire transfers or third-party payment processors.
OKX, the Malta-based exchange that ranks among the top five by trading volume, has partnered with Archax, a crypto-focused financial services provider that is regulated by the FCA. Archax Group will provide OKX with banking and payment services in the UK and Europe, as well as support its compliance efforts. OKX said the partnership will enable it to offer more fiat-to-crypto and crypto-to-crypto trading pairs, as well as expand its presence in the European market.
Binance, the world’s largest exchange by trading volume, has partnered with decade-old peer-to-peer lending firm that offers a range of crypto products and services, including a Visa card, a wallet app and a lending platform. Rebuilding Society will integrate Binance’s trading engine and liquidity into its own platform, allowing its users to access Binance’s spot and margin trading features. Binance said the partnership will enhance its user experience and security, as well as support its compliance efforts in the UK.
The new partnerships come as the UK is set to introduce new regulations for the crypto sector, following the recommendations of the Financial Action Task Force (FATF), an intergovernmental body that sets standards for combating money laundering and terrorist financing. The FCA has been designated as the supervisor of crypto firms in the UK and has given them until early 2024 to register with the regulator and demonstrate compliance with its rules. The FCA has warned that firms that fail to do so may face enforcement action or be forced to cease operations.
The FCA’s new regime for crypto asset financial promotions took effect on Oct. 8. “Firms could be given until 8 January 2024 to introduce features that require greater technical development, with the core rules still coming into effect from 8 October 2023,” the FCA said in an announcement.
The new rules apply for crypto promotions across various media forms, from websites and social media outlets to online advertising. To stay on the right side of the regulations, unregistered crypto asset firms have four routes to lawfully communicate crypto asset promotions within the UK.
The first route is that a promotion is communicated by an FCA-authorized person. The second is that a financial promotion is approved by an authorized person. The third way, employed by Coinbase, OKX, and Binance, involves the promotion being communicated by a crypto firm registered under the FCA’s anti-money laundering regulations. Lastly, promotions that comply with the conditions of an exemption in the Financial Promotion Order are deemed lawful.
The new regulations are expected to bring more clarity and legitimacy to the crypto sector in the UK, as well as protect consumers and investors from potential risks. The partnerships between the exchanges and the UK firms show that the crypto industry is willing to cooperate with regulators and adopt best practices to ensure a safe and sustainable growth of the sector.
Bitstamp in Partnership with three European Banks to offer Crypto Services
Bitstamp, one of the oldest and largest cryptocurrency exchanges in the world, has announced that it is working with three European banks to enable them to offer crypto services to their customers. The banks are Banque de France, Banco Santander and ING Group.
The cryptocurrency market has grown exponentially in the past decade, reaching a market capitalization of over $2 trillion in 2021. This has attracted the attention of many traditional financial institutions, who see the potential of crypto as a new source of revenue, innovation and customer satisfaction.
According to a recent survey by KPMG, more than 60% of global banks are either already offering or planning to offer crypto services in the next two years. These services include custody, trading, lending, payments and advisory. Some of the leading banks in this space are JP Morgan, Goldman Sachs, BNY Mellon and Standard Chartered.
The benefits of offering crypto services are manifold. For banks, it can help them diversify their portfolio, increase their fee income, enhance their brand image and attract new customers. For customers, it can provide them with more choice, convenience, security and access to the emerging digital economy.
According to a press release, Bitstamp will provide the banks with access to its trading platform, liquidity, custody and regulatory compliance solutions. The partnership aims to help the banks tap into the growing demand for crypto assets among retail and institutional investors.
Bitstamp CEO JB Graftieaux said: “We are excited to partner with these forward-thinking banks and help them bring the benefits of crypto to their clients. By leveraging our expertise and infrastructure, we can offer a fast and secure way for banks to enter the crypto space and meet the needs of their customers.”
This news was shared by Bitstamp’s Global Chief Commercial Officer, Robert Zagotta, during an interview with CoinDesk. In addition, he said that this has been facilitated by the European Union’s new Markets in Crypto Assets (MiCA) rules, which make it much easier for traditional financial firms to access digital assets.
Zagotta said Bitstamp has seen a lot of interest in Europe following the launch of its new Bitstamp-as-a-Service offering, a combination of licensing and white-label technologies designed to help banks and fintech companies launch cryptocurrency buying and selling services.
“In the last six to nine months, we’ve had quite an increase in inbound inquiries about this offering from large European banks. We are in advanced conversations with three such banks, household-name banks in Europe. I think first quarter-ish we will be able to announce,” said Bitstamp’s Global CCO.
It should be noted that Bitstamp is not disclosing the names of the European banks it is negotiating with. However, Zagotta believes that Bitstamp’s hands-off approach to regulation and governance has helped the exchange successfully navigate the crisis in the cryptocurrency market that emerged after the collapse of FTX.
The three banks have different plans and timelines for launching their crypto services. Banque de France, the central bank of France, is planning to offer crypto trading and custody to its clients by the end of this year. Banco Santander, the largest bank in Spain, is aiming to launch a crypto platform for its customers in early 2024. ING Group, a Dutch multinational banking and financial services corporation, is exploring various options for integrating crypto into its existing products and services.
However, offering crypto services also comes with significant challenges and risks. Banks need to comply with complex and evolving regulatory frameworks, ensure adequate cybersecurity and anti-money laundering measures, manage volatility and liquidity issues, and educate their staff and customers about the benefits and risks of crypto.
To overcome these challenges and succeed in the crypto space, banks need to adopt a strategic and holistic approach. They need to partner with reputable and reliable crypto service providers, leverage their existing infrastructure and expertise, invest in innovation and research, and foster a culture of learning and collaboration. By doing so, banks can position themselves as leaders in the crypto industry and gain a competitive edge in the rapidly changing financial landscape.
The partnership with Bitstamp is part of a broader trend of banks embracing crypto as a new asset class and a source of innovation. According to a recent report by KPMG, more than 60% of global banks are either already offering or planning to offer crypto services in the next two years. The report also highlighted the challenges and opportunities that crypto presents for banks, such as regulatory uncertainty, cybersecurity risks, customer education and operational efficiency.
Bitstamp, founded in 2011, is one of the longest-running and most trusted crypto exchanges in the world. It supports over 20 cryptocurrencies and fiat currencies and serves more than four million customers across 100 countries. Bitstamp is regulated by the Luxembourg Financial Industry Supervisory Commission (CSSF) and holds a BitLicense from the New York State Department of Financial Services (NYDFS).
