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Coinbase Becomes Electronic Money Institution Under U.K.’s FCA Regulations & Adds Support For Faster Payments
Disclaimer: This is not financial advice. I am not a financial advisor. What follows is my personal, subjective, biased opinion.
The News
Zeeshan Feroz, CEO of Coinbase UK, announced the firm is now in possession of a so-called e-money license. Additionally, the cryptocurrency exchange is the first to join the UK’s Faster Payments Service, enabling faster transfers of fiat currency into and out of Coinbase to and from local bank accounts.
Major strides in Europe: Coinbase is the First Crypto Exchange to Obtain a UK Bank Account
As EU customers were Coinbase’s largest growth region in 2017, the company is excited to be compliant with regulations, in order to make the product safer, easier, and faster to use, Feroz said.
The Facts
The FCA is the UK’s Financial Conduct Authority, and as such part of the government’s financial regulatory body, though it acts independently.
Being compliant with its Electronic Money Institution (EMI) license and the EU’s Payment Services Directive (PSD) grants Coinbase the right to issue electronic money and provide payment services, for example “services that allow payments to be made electronically, including through credit cards and money transfer operations.”
Since this is a European license, it means these grants are valid not just in the UK, but in another 23 states of the European Economic Area. However, it also forces Coinbase to conduct business according to certain rules, for example safeguarding funds, which means all customer balances in fiat currencies, in this case GBP, have to be kept in separate bank accounts.
The UK’s initiative called Faster Payments Service, which Coinbase also joined, aims to reduce wire transfer durations from several days to several hours. Replacing the standard SEPA process for UK customers, the company will run a pilot with a small number of institutional investors, before fully rolling out the service.
The Commentary
Regulations are coming and they’re coming fast. Government hearings are piling up, G20 members want to make cryptocurrencies a major talking point, and more politicians enter the conversation daily. Regarding players in the space, whoever’s compliant wins, and Coinbase is trying hard.
Easier. Faster. Safer. The license gives Coinbase more freedom in acting as a payment processor, which reduces hassle for customers. Replacing SEPA will allow customers to get their money in and out of the exchange within a single day, which is a critical factor for investors. The segregation of funds provides an extra layer of insurance. Even if Coinbase goes belly up, your deposited fiat is safe.
What’s more, thanks to the EEA extension, they can funnel these same services into another 23 states in the EU, which makes the UK-centered news statement a bit misleading, albeit not incorrect, especially pending what happens after Brexit.
Most importantly, these types of licenses allow a wider audience to join the crypto space. Mass adoption requires access points to where the masses spend their time and Coinbase just added a whole bunch of them.
Keep it crypto,Nik
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.