There are those in the cryptocurrency space who believe that excessive red tape is hampering innovation. If these entities had their way, financial task forces would take a hands-off approach, leaving the industry to self-regulate. And then there are those who believe that a lack of tighter and less ambiguous regulation is the reason why mainstream adoption has yet to materialize. Crypto needs to clean its house, they aver, before it can invite the world over the threshold.
Todd Crosland is firmly in the latter camp. The CEO of fast-growing U.S. exchange CoinZoom knows more than most about financial regulation, having founded Interbank FX in 2001. Over the next two decades, he grew the futures and commodities brokerage into a tightly regulated global powerhouse. Now, he’s on a mission to follow suit with CoinZoom – and is adamant that tighter regulation is a win-win for all participants, from crypto veterans to new players entering the game – PayPal (NASDAQ:PYPL) included.
The State of Crypto Regulation in the US
“We see the high regulatory burden in the U.S. as a long-term benefit for CoinZoom,” ventures Crosland, appraising the domestic landscape, which is far more stringent than that of other crypto nations. In his view, crypto traders – particularly those from an institutional background – cherish the legitimacy and trust that comes from dealing with a regulated U.S. exchange.
“Serious traders and institutions want to deal with a reputable and regulated firm,” insists Crosland. “There are lots of global exchanges who have decided to domicile in countries that we have barely heard of, and don’t require any regulatory requirements. The U.S. has the highest standards and highest capital requirements for any country in the world.”
For exchanges eyeing expansion into the U.S. market, the high regulatory bar can be a deterrent. Crosland should know, having spent over 18 months trying for a BitLicense, widely regarded as the most exacting crypto license in the world. The process has entailed “a myriad of requirements and qualifications for the company and team members,” concedes Crosland, but he is optimistic of a favorable outcome, noting “We are in the final stages of this process, and anticipate receiving our license in New York in the next six weeks.”
Eyeing Opportunities Overseas
The U.S. market might be the most demanding from a regulatory perspective, but it is by no means the only region whose appetite for digital assets is unsated. CoinZoom is registered as a Digital Currency Exchange in Australia and in the final stages of getting an E-Money Licence in the EU.
Through a partnership with Visa (V), the company has issued its own Visa card, enabling users to spend their Bitcoin, Ethereum, and an additional 26 other coins at over 53 million merchants worldwide, plus any ATM that accepts Visa. “We believe that the unique features of the CoinZoom Visa card are one of the first steps towards helping with mass adoption for crypto assets,” insists Crosland. “The convenience of going into a Starbucks (SBUX) and spending Bitcoin or other cryptocurrencies on the CoinZoom Visa card is a significant differentiator.”
The company has also developed ZoomMe, a peer-to-peer fiat and crypto remittance service. Customers can send USD or crypto anywhere in the world, instantly and for free, which is an attractive prospect given that MoneyGram and Western Union charge 3-4% for sending USD globally.
“Currently, CoinZoom has over 100,000 registered users in 180 countries,” explains Crosland. “The target markets for CoinZoom include the U.S., Europe, and Asia. We will be expanding the CoinZoom Visa card to Europe, UK, and Canada in the next three months. By the end of the first quarter of 2021, we will be expanding the CoinZoom Visa card into Asia.”
Why Greater Regulation Is Needed
As CoinZoom ramps up its quest to onboard more cryptocurrency users, its CEO is unapologetic about his desire for more robust regulation. “For the industry to continue to grow and become mainstream,” he insists, “customers must have trust in the exchanges. That is why CoinZoom chose the most highly regulated country to launch its exchange.
“In the past, there have been bad actors in the crypto space. Having enhanced AML/KYC requirements will only benefit the crypto space in the long run. Institutions are investing hundreds of millions of dollars into the crypto ecosystem each year, and having confidence in the industry through regulation is key.”
When pressed on whether tighter regulation may lead to a two-tier ecosystem, where withdrawing from exchanges into private wallets is criminalized, Crosland believes that this scenario will not arise – nor is it desirable.
“We don’t believe that a two-tiered bitcoin will emerge. U.S. regulators, including the SEC and the CFTC, have taken a measured approach to regulation of the crypto industry. These regulators do not want to stifle the innovation that the advent of the blockchain ecosystem presents.”
Nor is he against privacy coins – but believes that ownership of them should come with certain caveats. “Privacy coins are definitely an issue for global regulators and can be exploited for nefarious purposes. The view for CoinZoom comes down to our robust AML/KYC policies and procedures, as well as our transaction monitoring system.
“At the heart of every transaction, we do full KYC on both the purchaser and the seller for every transaction. As long as there is full AML and KYC for each customer and every transaction, we do not believe there is an issue with customers trading these privacy coins.”
What the Future Holds for CoinZoom and Crypto
As for the exchange that Todd Crosland co-founded in 2018, there is a lot to look forward to. As the industry enters a new bull market, with all the jubilation that this brings to long-term crypto holders, CoinZoom has plenty in the pipeline. This month, it listed two of the leading defi tokens, YFI and UNI, and is upping its overtures to retail customers – without losing sight of the institutional customers around whom Crosland’s previous venture, Interbank FX, was centered.
“CoinZoom has built a sophisticated matching engine at the heart of the exchange that provides a superb experience for high frequency traders, who place thousands of trades a day via our API,” explains Crosland. “We have also built a very popular app, CoinZoom Pro. It’s geared toward retail traders and has received hundreds of five-star reviews in the Apple App store and Google Play store.”
In the next three months, CoinZoom will be expanding its Visa card offering from the U.S. to include Europe, the U.K., and Canada. Then, in Q2 of 2021, CoinZoom will be launching margin trading and crypto lending, promises Crosland. By that time, few will be surprised if Bitcoin hasn’t tested new all-time highs. Nor will they be shocked if tighter regulation has begun to permeate the industry, just as Crosland predicted.