CEX.io is a cryptocurrency exchange headquartered in the United Kingdom.
The exchange has joined the Silvergate Exchange Network (SEN), which will provide CEX.io direct access to crypto industry giants such as:
- Kraken OTC
Additionally, SEN will also let CEX.io connect to some of its major customers.
Steve Gregory, the global chief operating officer of CEX.io, as well as the chief compliance officer of the US division of CEX.io, illustrated Silvergate as the benchmark for compliance with the US regulatory norms during an interview. They also stated that being part of SEN is like getting privileged access to an institutional crypto club.
Gregory previously worked with Gemini as their compliance officer. Gemini is an exchange set up by Tyler and Cameron Winklevoss under the New York Department of Financial Services (NYDFS) regulation.
CEX.io started its US operations in 2015 in Jersey City, NJ. It currently has permission to operate its exchange in about 17 US states. The firm has around 250 employees and operates in 180 countries.
As per Gregory:
“We are in the club now. Silvergate is the biggest bank in the space and with the SEN and we can facilitate trades to some of those larger institutions that are members.”
SEN delivers an immediate fiat transfer platform 24 hours a day, 7 days a week, to its big commercial customers. If a commercial company like Cumberland decides to send a few million dollars to CEX.io, for instance, Sen ensures this can be accomplished without a wire transfer.
Silvergate’s internal online banking utilizes an API to immediately transmit funds to an internal ledger. Moreover, according to Gregory, through SEN, they can simply have Silvergate shift their USD balance instead of doing a wire transfer, and a wall to wall transaction.
There is no concrete information available, however, as to how many companies have signed up with SEN to use its internal payment platform. Silvergate was not available for any comments because its IPO is at present in a quiet period. Nevertheless, SEN users claim there are a significant number of transactions already on the platform.
Eliminating systemic issues in the OTC crypto transactions, to encourage users to stay put is a smart move, which companies like Genesis (an OTC desk), Kingdom Trust, BitGo, and OTCXN are already pursuing.
CEX.io already has names of some banks that it would engage for managing crypto companies, whereas it just became the customer of Nevada-based trust company, Prime Trust, which currently facilitates the fiat on-ramp along with all banking services to Binance US. However, CEX.io has also worked with one more popular crypto bank, named Signature Bank.
Gregory was very appreciative of Signature Bank for the efficient and seamless service provided. He did, however, also mention the restriction Signature Bank imposed of not being able to process retail wire and ACH transfers for amounts less than $50,000, unless it has been grouped. Because of these restrictions, Gregory said that his company, CEX.io, would utilize Silvergate for retail ACH and wire (deposits and withdrawals) transactions amounting to below $50,000.
Apart from the US states where CEX.io does not require a license for operating its business, it has also cleared the required regulatory norms and gained licensed permission to operate in few other US states namely:
- New Hampshire
- New Jersey
- New Mexico
- Rhode Island
- South Dakota
- West Virginia
Gregory stated that CEX.io applied for a BitLicense in spring and also had various meetings with NYDFS. Additionally, a spokesperson from CEX.io shared that they expect approval from NYDFS in the near future. NYDFS is the authorized agency which grants companies that clear regulatory requirements with BitLicense, and also the New York Money Transmitter License.
However, Gregory had initially stated that starting business operations in the United States by establishing surety bonds for functioning in all the US states would be quite expensive. This is especially the case when one has to clear the set regulatory norms and wait for acquiring the said license for operating a crypto business. He further added:
“It makes it tough to disrupt some of the bigger exchanges that are already established.”