Two months after paying a $100 million fine in the US for illegal trading operations, cryptocurrency exchange BitMEX is lining up a test for Switzerland’s financial regulator.
With a raft of recent legislative amendments, “Crypto Nation” Switzerland is bidding to become a global hub for legally-compliant cryptocurrency activities. Crypto derivatives exchange BitMEX wants to leverage this legal basis to launch a brokerage service.
As I’ve said previously, the Swiss authorities see great advantages in gentrifying the upstart blockchain industry. While Switzerland has set up a legal framework in which the crypto industry can operate, regulators in the US and other countries have been wielding a big stick to bring rebellious companies to heel.
The Seychelles-incorporated BitMEX settled a lawsuitExternal link from the Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) in August. Three of its founders face outstanding criminal complaints in the US.
BitMEX, which started life as an anti-authoritarian challenge to the traditional financial system, insists it has put such legal issues to bed. “Only those crypto trading venues that can be fully regulated quickly will prevail. That will be the decisive competitive advantage in the future,” it says.
The company recruited former Stuttgart stock exchange boss Alexander Höptner as CEO in January. “Switzerland is building an impressive crypto ecosystem with all the hallmarks of an attractive destination for companies like ours that are growing quickly and innovating responsibly,” he said in a statementExternal link.
The group intends to open an office in Zurich or Zug in January to offer brokerage services under the brand BitMEX Link. The plan includes a potential bid for an unspecified license from the Swiss financial regulator.
Let’s not forget that on August 1 Switzerland introduced a new category of stock exchange license for trading securities on distributed ledger technology systems, such as blockchain.
But the Swiss Financial Market Supervisory Authority (FINMA) has already shown this year, with Bitcoin Suisse, that it will not give its blessing to companies that have legacy regulatory issues on their books.
BitMEX will have to prove that it has indeed cleaned up its act since being fined for unauthorised trading activities and breaching anti-money laundering regulations in the US.
Given the legal problems BitMEX has endured, Switzerland’s “openness, foresight, stability and legal certainty” were viewed as decisive advantages in choosing a first European destination. BitMEX also believes Switzerland is one of the best places to recruit blockchain talent.
Once established in Switzerland, the BitMEX brokerage will compete with compete with other companies that already offer the services in Switzerland, including Crypto Finance – which was bought by the German stock exchange earlier this year.
Set up in 2014, BitMEX has become one of the world’s biggest cryptocurrency trading venues. According to its website, the platform achieved more than $1 trillion in trading volume over the last year.
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