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San Francisco-based cryptocurrency prime brokerage, SFOX, partnered with the century-old New York-based M.Y. Safra Bank to provide crypto traders who use their platform with access to bank accounts backed by FDIC insurance.
Cryptocurrency prime dealer SFOX announced that they are partnering with M.Y. Safra Bank of New York in order to offer traders and investors deposit accounts backed by the Federal Deposit Insurance Corp. (FDIC).
BREAKING: @SFox just announced segregated accounts that are FDIC-insured.
Government-backed insurance is a BIG step towards mass adoption for regular consumers.
THE VIRUS IS SPREADING ?
— Pomp ? (@APompliano) May 14, 2019
This is the first time FDIC insurance has surfaced in the crypto dealer model that should enable traders direct access to their funds for “fast, global crypto trading.”
SFOX plans to connect traders who use its platform with access to all major crypto exchanges through a single pool of liquidity. Rather than depositing capital at each individual exchange they want to trade in, these investors could participate in various exchanges through a single account.
It will offer liquidity across ItBit, Gemini, Kraken, and others, meaning users can access all of those markets without having to make individual accounts on each. This offers a very attractive position for those who see themselves as professional traders. And the truth is, that if more platforms offered individual accounts like these, and not just pools of money, then issues like the one that recently happened at the Quadriga exchange could have been easier to resolve.
This is the first time in crypto trading, that both retail and institutional investors will be able to obtain a “segregated account,” which will allow them to hold their funds in their own name with a FDIC-backed bank—rather than a commingled account on an exchange.
The truth is that SFOX has been trying to reduce the risks that investors have with their crypto transactions, using its prime dealer platform that has been around for five years now.
Covering Only a Cash Portion of Crypto Transaction
FDIC is the agency that is known for protecting bank customers from losses of up to $250,000 per financial institution and even though this might seem like a great benefit to crypto industry – there is a catch. The insurance will cover only the cash portion of a crypto transaction, not Bitcoin, Ether, or other digital assets SFOX users buy on the exchange.
Be it as it may, this is still positive news for the space in which supporters continue to fight off critics about its legitimacy. If we look at the situation before, banks have been mostly aggressive in their denial of linking accounts with cryptocurrency trading in any capacity.
SFOX CEO Akbar Thobhani said:
“SFOX’s partnership with M.Y. Safra Bank represents another step forward in our mission to provide our clients with the best place to trade cryptoassets. M.Y. Safra’s Bank proven track record of providing custom banking solutions to institutions and HNWIs made them the ideal choice for taking SFOX trading one step closer to the goal of a truly frictionless and reliable trade experience across all cryptoassets.”
M.Y. Safra Bank CEO Jacob M. Safra said the partnership underscores their commitment to providing the best solutions within the newest domains of finance:
“M.Y. Safra Bank stands at the vanguard of financial innovation, while maintaining the highest standards of financial security and stability. We continually strive to innovate in the banking industry, and SFOX was the ideal partner with which to extend this philosophy to the burgeoning domain of cryptoassets.”
SFOX reported over $11 billion in transaction volume and had also partnered with the largest high-volume traders and businesses in crypto, such as Blockchain.com and tZero. The company has raised $23 million to date from investors including Khosla Ventures, DCG, Blockchain Capital, Tribe Capital, and Social Capital.
They were also first at developing the crypto prime dealer model in 2014, in order to reduce traders’ exchange counterparty risk while also giving them access to crypto assets from exchanges around the world.
Danny Kim, head of growth for SFOX, said that M.Y. Safra Bank sees “where digital currencies and crypto is going,” adding that it is a “part of the future.”