There comes a stage in the lifespan of new technologies, paradigms, and businesses that they endeavor to mature, to grow from their roots and expand, sometimes into the existing universe and sometimes into the unknown. Change, as they say, is good. With this post, we want to honor the beginning of a new era for CEX.IO – the launch of a dedicated presence in the US, CEX.IO Corp. The official opening of an office on the other side of the Atlantic Ocean is just the tip of the iceberg of work we’ve performed. Applications for licenses, compliance with anti-money laundering requirements, the establishment of partnerships with numerous payment processing providers and banks are just some of the examples. Not to mention that we’ve been serving select states in the US from the very beginning of CEX.IO! Expansion to the US weaves natively into our history. To see how, let’s look at the big picture first.
Evolution of digital assets
It all started with an obscure whitepaper by an anonymous Satoshi Nakamoto in 2009 – and the release of the first global cryptographic asset, Bitcoin. Nakamoto envisioned Bitcoin to become a worldwide peer-to-peer electronic cash system. Each bitcoin was programmed to be divisible into units of 100 million, or “satoshi”, per bitcoin – so that if all 21 million Bitcoin ever to be created were distributed worldwide, you could buy a cup of coffee with one “satoshi”. The dream of a worldwide medium of exchange independent of a centralized financial institution, with an immutable public ledger that could not be altered, would change the traditional paradigm of finance and central banking forever. Lofty in scale and daring in inspiration, Bitcoin was born in the wake of a global financial recession. Outside the scope of existing regulation, far removed from the mainstream and initially struggling to gain mass adoption, Bitcoin has been declared dead many times over. Yet it persists.
Since 2009 the “crypto” space has grown to include thousands of digital assets, ranging from a worldwide transaction settlement token to a pending Facebook stablecoin based on a basket of currencies which can be distributed to over 2.7 billion users. The most ambitious of cryptocurrencies elicited the worldwide ire of the government and banking elite on day one of their announcements.
What has really driven this expansion are the marketplaces to distribute and trade digital assets. These marketplaces ranged in scale – from a few dozen programmers exchanging bitcoin via hobbyist online message boards to proper centralized and decentralized high-frequency trading exchanges more resembling NYSE, CME and EBS.
Bitcoin has lead the ever-evolving market. In the 10 years since its inception, the digital asset class has exploded; hundreds of billions of dollars in market capitalization, thousands of new cryptographic assets created, all with the intention of applying blockchain technology to solve real-world problems. Quadrillion (a thousand trillion!) is a number that the industry analysts are tossing around as an estimate of the future market cap size, when factoring in the tokenization of real assets worldwide.
In the dramatic rise of digital asset distribution and the proliferation of trading markets, sometimes the goal of driving innovation goes past the point of regulatory comfort as not every element in the ecosystem is able to keep up. The difference is CEX.IO. Since 2013, our relentless efforts to innovate and deliver trading technologies and instruments in this environment has remained steadfast as we strive to provide a trusted, regulated, and secure trading platform to our clients.
The unregulated exchange space may initially seem quite attractive to a user. The abundance of various digital assets, no KYC, no limits. These all look like a dream come true, until reality kicks in. 2019 alone does not lack examples where users of multiple unregulated exchanges lost their funds or access to their accounts due to security hacks, money laundering lawsuits, securities law violations, or plain fraud. Counterparty risk is huge when your exchange is accessible only via VPN and is domiciled in a PO Box on the leeward side of Monkey Island. Safety of funds comes into question when an exchange tops the volume rankings of Coinmarketcap within the first months of its existence with almost obvious manufacturing of volume with wash sales performed by the exchange itself.
The ever-increasing competition and the lack of regulation drives many exchanges in the space to resort to unsavory growth strategies. This comes at the cost of increased risk, passed on to the user most of the time. This is not how CEX.IO does business.
Who do you trust to trade with and custody your assets?
Increasing counterparty risk for our customers has never been a part of our strategy. At CEX.IO, we’ve always understood the responsibility that comes with taking custody of users’ funds. Over the course of the last six years, we’ve stayed true to our volumes and prevented any possible market manipulation on our platform.
We believe the only way to grow for us is by nurturing a loyal and expanding customer base. To achieve that, we have to provide a secure and reliable platform for our users to engage with the crypto economy. Trust is paramount for this ecosystem. Regulation, from self-imposed strict rules to obtaining licenses, is an inevitable part of building this trust.
The regulated exchanges are a special breed in the crypto universe. Why? Because they are subject to a higher standard – someone is looking under the rock.
At CEX.IO, we’ve pursued higher standards since inception, and we know that our six-year history of delivering services with an unblemished record will give you peace of mind in the safety of your assets. We welcome the diligence and careful investigation that regulation and licensing entail. Whether that be extensive audits of our financials, thorough background checks, carefully vetted anti-money laundering and know your customer procedures, penetration tests on our technology infrastructure or even our willingness to create a transparent dialogue with our regulators; we are here to earn your trust.
When other large exchanges have run from regulation, CEX.IO has embraced it. We have been able to bring our services to 224 countries and territories around the world and now we want to bring it to the people of the United States. This is an incredible opportunity that, frankly, we have earned.
CEX.IO began in 2013 as the first and original Bitcoin mining pool (participants pool resources for a higher hash rate in order to increase the odds of mining a block of Bitcoin successfully – think crowdfunding for the gold rush in Alaska). We’ve since transitioned to the exchange model, with over 2.7 million registered users across the globe. We are over 250 professionals strong, delivering services from 5 offices worldwide. The technology of our trading platform has been built in-house, and our founder was one of three software engineers who wrote the source code of the original matching engine.
CEX.IO has been registered in the United States with FinCEN as a Money Service Business (“MSB”) since 2015 and has completed 3 successful independent annual audits, demonstrating our continued compliance with MSB requirements in the US. We are pursuing registration in Gibraltar, the United Kingdom, Cyprus, and other jurisdictions.
CEX.IO is one of the few exchanges to accept credit cards for crypto purchases. We continue improving this process for our users and we enable a growing number of major crypto portals with the same capability on their back end. Our team has established banking relationships with dozens of different banks in 12 countries, including the United States. The list goes on.
CEX.IO is actively pursuing regulated status all over the world – because we want our clients to know that we aren’t here to make a quick buck and run away. Our technology transforms, but the underlying principles of how we operate remain the same. We are in the business not to just marginally improve the user experience; instead, we aspire to radically transform it while giving clients tools they can trust. At the core, CEX.IO is focused on guiding its users into the world of open finance in an easy, efficient, safe, and transparent way. We are here to stay, and are always available to you, striving to be the trusted place for worldwide audiences to participate in the digital evolution. The digital exchange space is changing, and becoming more regulated, to the benefit of clients and exchanges as a whole. CEX.IO is at the forefront of this necessary evolution, all over the world. We love our clients, and we love what we do!
Our next move – to obtain Money Transmission Licenses in every state in the United States.
Why? We are pursuing a higher bar – in all individual US states – to become approved, licensed, bonded, regulated, quarterly audited license holders. This will allow CEX.IO to service all jurisdictions in the US and to continue in our mission to provide a regulated, trusted path for the general public to participate in the digital economy. We’ve already received 9 licenses in 2019, with many more to come.
CEX.IO has launched a dedicated US presence – CEX.IO Corp – to facilitate US growth under a transparent, regulated umbrella. We are excited to serve new geographies and to roll out new products uniquely tailored to those geographies. What an opening of the US office means for the existing users, both in the US and outside, we’ll cover in upcoming posts soon! Stay tuned!
Finally, it is symbolic that we announce our new office around July 4th, a day when thirteen American states declared independence from the British monarchy in 1776. This day marked the beginning of a new nation that grew into one of the strongest, while embracing diversity from all around the world. At CEX.IO, we are reminded of our diversity every single day. This expansion to the US comes naturally on our evolutionary path. With the UK office still being our alma mater, we open new doors in the US, thrilled about the opportunities, proud of the work accomplished, and excited about what lies ahead. Here’s to new horizons!
The CEX.IO Team