● KrakenFX Wins Spot at First Bitcoin Bank in USA.
● Majority of U.S. States Adopt Unified Framework for Cryptocurrency Providers.
● India Makes Moves to Ban Cryptocurrency Trading
To kick off this week’s edition of Overbit Weekly Closeout, we first take a look at the United States, where a couple of events are making headlines in the cryptocurrency space.
Our first story starts in Wyoming, where Kraken Financial, a US-based cryptocurrency exchange, just won approval to create the first-ever crypto-bank in America. CEO of Kraken, David Kinitsky, had this to say:
“We’re thrilled to work in a state so aligned with our philosophy and values. Wyoming is a rare and shining example of how thoughtful regulation can drive innovation for FinTech”.
For a little background: In 2019, the state of Wyoming passed HB-74, a law to allow for a new type of bank known as a special purpose depository institution (SPDI). There’s a bit of legal jargon to read through, but the gist is simple: Wyoming aimed to create a new type of banking charter that would allow banks to “focus heavily on digital assets, such as virtual currencies, digital securities and utility tokens”. Without this law, cryptocurrency falls in a legal grey area for many banking institutions, which prevents them from offering custodial service for its customers. Thanks to HB-74, banks in Wyoming can now operate just like ordinary banks, whilst now extending their regularly-offered services to crypto-assets.
This decision to grant Kraken Exchange an SPDI charter will go down in the history books of cryptocurrency. Although America is severely far behind on digital assets compared to many other countries, the U.S. is still looked at as the standard in a lot of ways, especially when it comes to finance and currency. It’s safe to say this move certainly feels like the first major domino to fall for the western world of cryptocurrency.
Continuing on with the United States, we continue to see major adoption at the institutional banking level. On Wednesday, 16 September, The Conference of State Bank Supervisors, which represents regulators from all major U.S. states and territories, has just launched a new framework covering digital payments and cryptocurrency companies. Not many people are well-aware of this conference, so it stands to reason this story was not front-page material. Nevertheless, the takeaway from this conference is simple and groundbreaking; 49 U.S. states have agreed to a uniform set of regulations for money service business, which importantly includes any cryptocurrency service providers.
This new initiative, entitled the “MSB Networked Supervision”, will apply to 78% of America’s payments system, totalling more than $1 trillion a year. By establishing these new guidelines, regulators hope to cut down on the amount of hoops that money service providers have to jump through. Rather than applying on a state-by-state basis, these companies can now complete one, comprehensive application. This is a huge win for many cryptocurrency startups and smaller companies, who are far too often bogged-down from the regulatory charades. If you asked us, this story, along with the previous one, makes it seem like two dominos fell in one day for the American cryptocurrency world.
To close out this week’s edition, we move to India – an eastern country that is falling out of line with most of its companions with a recent move against cryptocurrency. On Tuesday, 15 September, it was reported that Indian officials planned to introduce a new law banning the trade of cryptocurrency. For some, this comes at no surprise. Back in 2018, PM Narendra Modi banned cryptocurrency transactions after a slew of prominent frauds. Several exchanges and companies subsequently shut down, but many fought on; eventually winning the right to restart services in March 2020, thanks to the Indian Supreme Court.
Since then, cryptocurrency activity in India has skyrocketed several hundred percent on a month-over-month basis. It seems this earlier ban did nothing but cause the buildup of pent-up demand, especially with cryptocurrency itself skyrocketing due to the boom in DeFi. However, all of this could be coming to an end again for India as lawmakers and cabinet officials mull over the legislative banning of cryptocurrency trading. This comes as a stark contrast to many other Eastern countries, who have simply went with the flow and adopted robust regulatory frameworks. As we talked about in an earlier issue, it doesn’t seem like the conflict between cryptocurrency (the digital world) and government (the physical world) is going away anytime soon. The way we see it, though, is that the flight towards a “digital money” is an immovable force, and most should be wary of trying to fight against it.
If you want to go with the flow and be a part of this digital movement, remember – Overbit.com is the best place to be. Thanks for reading this week’s Overbit Weekly Closeout.
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