Cryptocurrency exchange and wallet service provider Coinbase has bagged an e-money license from the UK’s Financial Conduct Authority (FCA).
The new development was revealed by Zeeshan Feroz, the chief executive of the company’s UK division. Feroz explained in in a blog post on March 14 that the new license only covers the company’s fiat activities and not its cryptocurrency transactions. In other words, the move will impact only the funds coming in and going out of Coinbase’s exchequer, and not what happens in between during the usual dealings in crypto.
For the uninitiated, the e-money license will enable Coinbase to issue e-money and facilitate dedicated payment services in the UK. Additionally, the exchange will clear regulatory checkpoints overseeing activities such as segregation of client funds, which is basically the mechanism by which customer fiat balances are kept separately (read: in different bank accounts) from the company’s own operational funds.
The e-money license is applicable in the UK, as well as 23 other countries within the European Union (EU). This essentially means that Coinbase is now eligible to provide payment services and issue e-money in these regions.
In a conversation with the media, Feroz stated that the FCA’s decision to grant Coinbase the e-money license is a testimony to the high regard the agency holds for its KYC processes and the overall “approval of the compliance.”
“We are committed to making sure customer funds are always secure, and this update means that our e-money operations have safeguards and operational standards at par with other regulated financial institutions,” he stated in the blog.
Coinbase is optimistic that among numerous other perks, the new license will also play a key role in making cryptocurrencies accessible to many first-time-users. A smaller, lesser known exchange has also recently launched in the UK, known as Vertpig, focusing on bitcoin, litecoin and vertcoin. The combination of the two bodes well for crypto enthusiasts in Britain.
Support for FPS
In yet another giant leap, Coinbase has officially added support for the Faster Payment Scheme (FPS) for its users in the UK. FPS is replacing SEPA for UK customers, thus paving the way for a new system that offers a more convenient yet familiar payment experience. But above all, it is compatible with all major UK banks.
“UK customers will benefit from faster, safer and seamless bank transfers. We will start with a pilot, giving a small number of institutional users access to Faster Payments. In the coming weeks, we will begin rolling out to all UK customers, making the Coinbase experience increasingly easier,” Feroz added.
Coinbase is currently conducting a pilot to test the waters, and if everything goes as per plan, the exchange will make the new offering available for retail customers en masse.
On the flip side, it is not yet clear how the UK’s impending exit from the European Union (EU) will affect the new arrangement.
A spokesperson representing the exchange said that Coinbase is allowed to trade within EU so long as the controversial Brexit doesn’t come into effect. As a worrying factor for the company, Coinbase might have to pull out of the union after Brexit – even if temporarily – unless certain existing rules aren’t modified before the UK breaks away from the union.
It is worth mentioning here that the European crypto sector is among the biggest contributors to Coinbase’s bottom line. In 2017, the crypto market in the region expanded twice as fast as any other market. The UK’s domestic sector, in particular, happens to be the biggest market for the company, which is why Coinbase leaves no stones unturned to strengthen its foothold in the country.