Bitcoin exchanges have always been quite a difficult target for regulators all over the world. It is difficult to define their business model as a money transmission business, as they act as a bank more often than not. In fact, most Bitcoin exchanges store consumer funds, both in fiat or cryptocurrency, which makes them a bank of some sorts. A new OCC Charter could give them that status, or something close to it, at last.
Bitcoin Exchanges Are Special Types of Banks
For the longest time, people have had the wrong impression about Bitcoin exchanges. Even though they actually transmit money in a way, they act more like a bank than anything else. This is also the primary reason why people should never trust exchanges with their money, regardless in which value it is. If the platform goes down, users lose their funds, as they are never in full control.
The US Treasury has been paying close attention to how cryptocurrency is evolving, and come to the conclusion bitcoin exchanges need to receive a special status. In most cases, additional regulation and licensing are never a positive development, But this new change could be quite positive, as it would effectively label Bitcoin exchanges as something entirely different.
This decision – which is currently open for comments from the public – will impact cryptocurrency in a positive manner over all. In fact, it can drive mainstream adoption of Bitcoin and consorts, which is the ultimate objective. Additional credibility is a positive development for Bitcoin exchanges, and no longer worrying about complicated licensing processes is an extra bonus.
One thing that cannot be denied is how cryptocurrency is slowly changing the financial system from within. Switzerland is leading the charge when it comes to embracing Bitcoin for mainstream purposes. The country has hinted at the creation of a “crypto bank” status for digital currency companies as well, showcasing their desire to push bitcoin adoption to mainstream levels.
The banking sector needs innovation, and it can come from multiple sources. Fintech and blockchain are just two areas considered as contenders right now, whereas cryptocurrency was often shrugged off. But as time progresses, government officials and financial experts start to see the value of Bitcoin as a payment tool, even though it will require additional regulation.
Although this new charter is quite significant for Bitcoin exchanges, it is not an official form of legislation just yet. Ancient laws and innovative concepts such as bitcoin exchanges do not blend well, and proper solutions are direly needed. A rational ecosystem works best for all parties involved, and the new OCC charter shows that goal can be accomplished with relative ease.
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