Stellar Lumens has recently been approved by New York financial regulators to trade on the itBit exchange. It is the first time Lumens has seen the green light from the authority.
ItBit is a trading platform for digital currencies which was established for institutional investors and initially covered only bitcoin investment. This Thursday, the firm received approval for managing ethereum, bitcoin cash, and litecoin from New York’s Department of Financial Services.
It was also the first company dealing in virtual currencies to receive a banking law charter from NYDFS three years ago. The authorization is said to have greater implications than New York’s famed BitLicense. The certificate allows companies to offer trading and holding services for its clients in the state.
Another company to receive BitLicense from NYDFS was Xapo which works as a bitcoin storage platform supervising an underground vault in Switzerland. It is the sixth BitLicense granted since its advent in 2015.
Being one of the most valuable digital currencies with a market cap of over $4.3 billion, Stellar Lumen’s approval is significant. It hints that regulating authorities are not considering virtual coins as securities, unlike stocks or bonds. The decision is welcomed by other altcoins as being a security involves enrolment with the U.S. Securities and Exchange Commission as a broker-dealer.
Co-founder and CEO of itBit’s parent firm Paxos, Chad Cascarilla, said, “That’s why we’ve added them to the exchange. If they were a security, you’d have to go through a different process.”
Founded in 2014 by Jed McCaleb, Stellar created Lumens. Its owner is also acknowledged of starting Ripple and the non-working bitcoin exchange Mt.Gox. Lumen is used from messaging start-ups like Kik to major tech players like IBM that use the platform to send payments between nations of the South Pacific region. After the circulation of the news, prices for Lumens increased more than 5 percent to 24 cents.
Cascarilla added that addition of four digital coins was affirmed after many users demanded these tokens. He said that currently no other token will be entertained, but there is a possibility of adding more in future especially ripple’s XRP.
On the one hand, other crypto exchanges like Circle and Coinbase have focused more on individual retailers, itBit aims to tap the higher end institutional market. It has mainly dealt with private equity firms, hedge funds, wealthy businesspeople and other Wall Street players.
The firm has developed as a custodian to large funds invested by institutional clients. It also provides the feature of collateral services that allows the customers to guarantee their crypto holdings while dealing in highly risky assets like derivatives.
Custodianship for digital currency has been in high demand recently as Wall Street investors are trying to invade the crypto market with their strict compliance standards. As per demand, Coinbase is launching its own custody service for major investors.
It would be interesting to see whether Lumens is able to pose any serious challenge to other established digital coins. If the currency clicks among investors itBit will be parsing itself looking back at its decision.