United States

Seed CX exchange wins New York BitLicense

The digital asset exchange focuses on institutional investors, not the retail clients fueling the current cryptocurrency boom

Seed CX, a cryptocurrency exchange for large institutional investors, announced on July 15 that it has received a pair of virtual currency BitLicenses from the New York Department of Financial Services.

The licenses are important because a great many institutional investors are located in New York; the NYDFS was the first agency in the U.S. to regulate cryptocurrency exchanges. Its BitLicense is widely considered to be the toughest to obtain, giving it influence beyond New York’s borders. 

The BitLicenses issued to Seed CX subsidiaries Seed Digital Commodities Market and its settlement affiliate Zero Hash are only the 20th and 21st approved by the NYDFS, Financial Services Superintendent Linda Lacewell said in a statement. Zero Hash also received a money transmitter license from NYDFS, permitting it to custody and settle fiat currency.

Seed CX CEO Edward Woodford told Modern Consensus that the NYDFS virtual currency licenses, “not only allow Seed CX to do business in New York, they are further substantiation that Seed CX meets every requirement necessary and more for institutions to buy and sell digital assets.” 

They are “the next step in our growth to becoming the leader in institutional trading of digital assets,” Woodford added. 

Seed CX currently offers trading and settlement for bitcoin (BTC), ether (ETH), litecoin (LTC), bitcoin cash (BCH), and the PAX stablecoin in 20 fiat currency pairs. It also plans to offer a market for CFTC-regulated digital asset derivatives, Woodford said in a statement.

Woodford also said he believes that the strong regulation offered by New York can entice more institutional investors into the market. Noting that quite a few institutions have been trading digital asset for years, Woodford said, “as exchanges like Seed CX offer them the market safeguards they demand, these institutions and others are only becoming more confident and secure in entering the digital asset space.”  

That will be important to continuing the current bull market in cryptocurrencies, as new institutional investors are not behind it, Binance CEO Changpeng “CZ” Zhao, told Bloomberg on July 12. The largest cryptocurrency exchange said, “[t]he number of institutions coming into this industry has not increased that tremendously in 2019 yet.”

Malta-based Binance did not do business in New York even before it pulled out of the U.S. altogether in mid-June, following the announcement of a partnership with BAM Trading Services to create an American cryptocurrency exchange, Binance.us.

Backed by Bain Capital Ventures, Seed CX also has licenses from the Commodity Futures Trading Commission (CFTC), U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN); and is a registered money transmitter in 34 states.  

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.