Asian companies are accelerating the crypto industry’s push to make exchanges work more like traditional banks.
The crypto wallet and security startup CoolBitX raised $16.7 million in a round led by Japanese financial group SBI Holdings, with participation from the National Development Fund of Taiwan, Korean crypto exchange BitSonic and Japanese financial firm Monex. In 2020, the startup’s focus is on new products and features that comply with new rules from the Financial Action Task Force (FATF) that require businesses to collect and pass information about customers when transferring funds between firms.
Several Asian countries, including Singapore, South Korea and Japan, swiftly responded to the token boom of 2017 with regulatory proposals and enforcement. As such, crypto companies in these regions must follow strict anti-money laundering (AML) and know-your-customer (KYC) procedures. CoolBitX CEO Michael Ou argued in a 2019 column that many countries in the region now have a more mature crypto industry than North America’s.
“We believed it was necessary to be ahead of the regulatory curve and have a solution in place in anticipation of stricter AML regulations from the South Korean government,” said BitSonic CEO Jinwook Shin. “In the coming months, the South Korean government is expected to pass regulations that will change the country’s cryptocurrency landscape and this investment [in CoolBitX] allows us to be on top of these regulations.”
Underscoring that same point about professional exchange guidelines, Monex Group CEO Oki Matsumoto said in a press statement that as a cryptocurrency exchange owner he sees “huge potential in CoolBitX” to promote the “proper adoption of virtual assets” in a fair yet robust industry. “We continue to closely monitor regulatory developments around the world in order to roll out each product or service to as broad a market as possible,” said CoolBitX international manager Elsa Madrolle, an alum of derivatives exchange CME Group. “Our plans are ultimately to expand globally.”
Madrolle added she expects cryptocurrency exchanges to soon have experiences that “resemble how people transfer money electronically using a digital bank.” Shin added his exchange is working with CoolBitX to “demonstrate our commitment to compliance and willingness to work hand-in-hand with the government.”
If Asian markets offer a harbinger of industry norms, then future fiat on-ramps and cryptocurrency custody products will fall in line with digital banking norms. Madrolle said it’s too soon to know how such regulations will impact the startup’s hardware wallet, but she doesn’t expect future features to hinder or inconvenience retail users.
“FATF-compliant regulation should help draw attention to cryptocurrency as a valid asset class and create more comfort for bigger institutions to consider investing,” she said.