FTX.US becomes latest crypto exchange to apply for a bank charter
The US-based affiliate of Sam Bankman-Fried’s FTX crypto exchange has applied for a New York trust charter (becoming a New York Limited Liability Trust Company) with the state’s Department of Financial Services (NYDFS).
If approved, the coveted licence will enable FTX.US to offer its cryptocurrency trading services to clients based in New York. Additionally, a NY Trust Charter allows a company to provide services in many other states without obtaining additional licenses.
To date, the state’s regulator has only approved a handful of companies engaged in cryptocurrency business activity, namely wallet and custodian BitGo, Gemini and Coinbase exchanges, as well as stablecoin issuer Paxos.
FTX.US will be on even firmer footing with its designation as a qualified provider under the SEC’s requirements. Also, the NY approval reduces reliance on third-party financial institutions and allows the exchange to provide deposit-taking, custody and fiduciary services for digital assets, which are usually limited to banks or registered broker-dealers.
With a banking charter, FTX.US can provide sub-custody services for any financial institution seeking to secure large amounts of digital assets, like holding assets for the main custodian. However, a New York charter would place the exchange under increased regulatory scrutiny.
FTX.US was valued at $8 billion
Stablecoin issuer Circle is also in discussions with US regulators to become the fourth crypto-native company to score a federal trust charter through the Office of the Comptroller of the Currency (OCC).
FTX US made headlines last month when the exchange has become an investor in New York City-based IEX Group, the eighth largest stock exchange operator globally. The startup took a bet and made a strategic investment in the “Flash Boys” exchange as it aims to leverage its expertise and infrastructure to establish a regulated marketplace for buying, selling, and trading digital asset securities.
FTX.US, an affiliate of cryptocurrency exchange FTX, has seen its valuation climb to $8 billion following the successful closing of Series A funding worth $400 million. The parent company, FTX Trading, was recently valued at $32 billion.
The fresh capital injection came on the heels of FTX launching a non-fungible (NFT) marketplace exclusively for customers living in the United States. The platform enables users to mint, buy and sell NFTs — all traded cross-chain across the Ethereum and Solana blockchains.
FTX.US also acquired Ledger Holdings Inc., parent company of a CFTC-regulated digital currency futures and options exchange, which was then rebranded as FTX US Derivatives.