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LedgerX, a Cryptocurrency asset management company is launching the first-ever Bitcoin savings account to be regulated by the Commodities Future Trading Commission. The savings account will allow for the safe storage of bitcoins, with consumers having the ability to earn interest on their account holdings paid in fiat currency.
While functioning like a savings account, LedgerXSavings will give users the ability to execute what is known as a call option. A call option allows an investor to buy a given commodity at a set price within a set period of time.
This option has been available in the traditional investing world for a long time. LedgerX’s goal is to simplify the process for the less educated investor who wants to be able to sell their rights to bitcoin for a premium price.
In January, the CFTC sued three different Cryptocurrency businesses for fraud putting the entire industry on notice that unlicensed operators in the space will be aggressively pursued.
What distinguishes the LedgerX savings account product is that it is licensed as a derivatives clearing organization and swap execution facility. With these key details in place, consumers can now open up an account for themselves.
In light of all of the regulatory crackdowns that the crypto industry has witnessed over the past two years more and more businesses are demonstrating a willingness to ensure compliance recognizing the potential perils of trying to play outside of the red tape. Many are also moving to countries with more favorable financial regulations in place.
Local Law Abiding Citizens
As of January 30, 2018 Cryptocurrency traders in South Korea are now required to link their Cryptocurrency exchange accounts to their fiat bank accounts using their real names. While this policy change temporarily had a negative impact on crypto price movement, Korean exchanges are still operating on home soil and abiding by the new laws. So are their users.
Here in North America, companies like Coinbase.com have also adapted to change and let their customers know they intend to follow the law and work with regulators. On February 23rd of this year, the company sent out a message to over 13,000 customers demanding taxpayer identification information at the request of the Internal Revenue Service. A court order outlined everything required.
Many crypto businesses are perfectly fine with following freshly minted government regulations and passing down the obligation to their customers. Yet just as many projects are skirting regulations by moving their operations to countries that take a more liberal stance not only on cryptocurrencies specifically, but also Know Your Client (KYC) and Anti-Money Laundering (AML) laws.
In the first 10 months of 2017, an estimated $550 million US was raised by initial coin offerings specifically based in Switzerland. Companies based in the United States directly raised only $30 million more than that.
It’s not just crypto companies raising capital via ICOs that are moving. Exchanges are switching things up too. By way of example, Binance and OKEx are negotiating deals that will allow them to do business in crypto-friendly Malta.
Projects like Tezos (which has yet to launch due to legal trouble despite a $232 million funding raise) in addition to setting up their nonprofit foundations in Switzerland are even hosting their development teams outside of North America. In Tezos’ case, France is the destination of choice.
The Customer Always Wins
The fact is that no matter where Cryptocurrency businesses choose to operate, the customer always wins. The LedgerXSavings solution aims to give consumers the best of both Bitcoin and fiat currency. The savings account is one of the more innovative and practical solutions to come out of the blockchain space in 2018.
As banks have to fight harder and harder to keep their share of the market in an increasingly evolving fintech industry, the most innovative and useful ideas brought to market will ultimately win people over.
Jack Choros is a freelance writer with Blockchain Business News Network