BUENOS AIRES – During the recent G20 conference, the call for the taxation of cryptocurrency was brought to attention due to fears of money laundering, according to a report from Japanese news outlet Jiji.com.
“We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading,” said Christine Sandler, head of sales at Coinbase.
“We felt this was a huge benefit to our clients to actually leverage both our exchange and our OTC business.”
Sandler stated the company plans to increase services to offer delayed settlement and
OTC trading happens amongst two parties directly, instead of over an exchange and normally occurs between an investment bank and its clients.
This month, the company also began to allow trading of any asset that trades on Coinbase Prime and order books through its web interface, email, Skype, Bloomberg IB, or phone, according to documentation shared with some clients.
“Trades settle seamlessly and instantly, with funds available for immediate withdrawal” the documents stated.
Coinbase is not the first to offer OTC trading services. Competitors such as itBit, Genesis Trading, Kinetic Capital, Circle, and others already offer these services.
So what makes Coinbase’s OTC trading different?
“Circle and a number of others have complementary products, but they also trade on a proprietary basis, so they are the counterparty to each transaction, while we, in fact, are matching client orders,” Sandler stated.
“From our crypto first clients, we’re hearing that nothing has changed with respect to technology, and they’re still absolutely committed to crypto … to the technology. I think that there’s one small silver lining to this volatility … [it’s] that crypto’s been front and center of the mainstream financial media for the last few weeks. I think that has driven … forced a lot of institutions to think, really, is this an opportunistic investment point for crypto at this point.”
Individuals and institutions can enroll in this service to deposit US dollars from bank accounts, convert those dollars into tokens usable everywhere the internet reaches (subject to the token’s compliance controls), and redeem USDC tokens and cash out to bank accounts.
“When we founded Circle five years ago, we and many in the crypto community envisioned fiat money and financial contracts executing on top of distributed public network infrastructure, building on open standards that would allow us all to share value as instantly and easily as we can access content in web browsers and exchange messages in email and messaging apps,” the company stated on a recent blog post.
In addition to immediate usage on Circle Poloniex and Circle Trade, more than 20 companies are also announcing or launching support for USDC today.
Other wallets, exchanges, and software applications can add support for the USDC token through the open ERC-20 standard.
Price-stable tokens are foundational requirements for enabling powerful new global financial contracts, products, and services on the internet.
USDC is the first of several fiat tokens CENTRE expects to deliver, and Circle is the first of several forthcoming CENTRE members to launch USDC issuance.
Just as HTTPS, SMTP and SIP enabled free borderless information sharing and communications, crypto assets and blockchain technology will enable us to exchange value and transact with one another in a similar way: instantly, globally, securely and at low cost.
A fundamental building block of this vision is the tokenization of fiat currency itself, through what are now referred to as fiat stablecoins.
A safe, transparent and trustworthy layer for fiat to operate over open blockchains and within smart contracts is a necessary precondition to the broader and more revolutionary potential of a crypto-powered global economy. USDC aims to meet this need.
This market infrastructure succeeds only if it is a base layer that everyone can all use and build upon, and which no one issuer can centrally control.
Because of the critical need for openness and interoperability, Circle helped to create CENTRE, an emerging consortium that is defining standards and policies for fiat stablecoins as well as enforcing a governance scheme for issuers of CENTRE-enabled technology.
USDC is the first release of technology developed by CENTRE, and more information about CENTRE’s USDC contract is available on the CENTRE blog.
USDC is built on openness and accountability, enshrined in the governance and technology standards effort of CENTRE.
Commercial issuers of USDC are required by CENTRE to:
• Be licensed to handle electronic money, such as banking, money transmission or trust charters
• Have audited AML and Compliance programs that meet FATF standards
• Back all tokens on a fully reserved basis and provide monthly published proof of reserves attested to by certified public auditors
• Support fungible exchange and redemption of USDC tokens from other authorized issuer members
• Meet other reporting and review requirements established by CENTRE
Leveraging $20m in funding raised last year, CENTRE is launching its broader membership framework which includes other established financial technology firms as additional issuers.
Over the coming weeks, CENTRE will share more about these other members beyond Circle.
CENTRE believes that an open internet of value exchange can transform and integrate the world more deeply, eventually eliminating artificial economic borders and enabling a more efficient and inclusive global marketplace that connects every person on the planet.
The future of the global economy is open, shared, inclusive, far more evenly distributed, and powerful not only for a few chosen gatekeepers, but for all who will connect.
This vision relies upon an open standards model for fiat money on the internet, which is emerging now with broad industry support behind USDC.
“We recognize that our extraordinary growth these past few years has not come without some growing pains for our users. We look forward to bringing Circle’s experience to increase the scalability and reliability of our platform and operations,” Poloniex said in a statement.
Circle intends to bring Poloniex beyond being “an exchange for only crypto assets.”
“We envision a robust multi-sided distributed marketplace that can host tokens which represent everything of value: physical goods, fundraising and equity, real estate, creative productions such as works of art, music and literature, service leases and time-based rentals, credit, futures, and more,” Cirlce co-founders Jeremy Allaire and Sean Neville stated.
Poloniex informed its customers that they would not see a disruption of any services during the transition, stating “any updates we make in the course of this transition will be behind-the-scenes and focused on strengthening user experience, platform performance, and security.”
“Your funds will remain safe and access to account functionality uninterrupted throughout,” the exchange stated further.