The registration means Bitstamp is authorised to offer a range of services to UK clients, including custody of cryptoassets, the purchase or sale of cryptoassets in legal tender, and the trading of cryptoassets against other digital assets.
Jack Ehlers, general manager and chief operative officer at Bitstamp, explained that despite not engaging in proactive marketing efforts in the UK for nearly two years, the market is one of the company’s largest. “The UK is one of the top 10 markets for us. An active crypto market has built up there over the last few decades, both in the retail and institutional market.”
By obtaining its new status, Bitstamp must adhere to the same financial standards and customer protections applied to traditional financial institutions, including anti-money laundering and counter-terrorist financing measures. The company must also conform with the FCA’s new advertising rules that requires first-time buyers to 24-hour “cooling-off period.”
Ehlers was supportive of the FCA’s new promotional rules, which also include a suitability questionnaire. “You won’t be able to just put your card in as a first-time buyer, open an account, go through the verification process and buy crypto. You’ll have a 24-hour period where you can ask yourself again, when you wake up the next morning, do I really want to buy this?” Ehlers said.
Bitstamp was founded in Slovenia by Nejc Kodrič and Damijan Merlak in 2011. In 2016, the Luxembourg government granted Bitstamp a license to be fully regulated in the EU as a payment institution, allowing it to do business in all EU member states. The exchange now has 52 global licences to operate.
“[Cryptoassets] are definitely not going away. They’re here to stay. The big question people need to ask themselves is: how much do you want to be exposed to it?”
Banks developing their own custodial setup
The failure of major crypto asset exchange FTX last year has raised concerns about asset protection. According to a survey on Crypto Asset Management published last month, nearly three-fourths of asset and wealth managers surveyed in Luxembourg are concerned that market infrastructures for cryptoassets lack maturity. The ability to move assets between different off-exchange settlement networks (OESNs) remains a significant market challenge.
Ehlers said OESNs are largely used by large institutional traders and that major banks offering customers access to crypto assets are looking into their own custodial setup. “They may not want to build an exchange like what we've done, matching orders and having a real order book, but they don't want to be at risk of the exchange having problems with their custody of cryptoassets.”
Cryptoassets are “here to stay”
2022 was a difficult year for crypto asset owners, with an eye-watering $2trn (€1.82trn) in asset valuations wiped off the market. Despite the challenges, Ehlers is confident there is still a strong future for crypto assets. “[Cryptoassets] are definitely not going away. They’re here to stay. It's just like any other sort of traditional financial option. The big question people need to ask themselves is: how much do you want to be exposed to it?”