When the cryptocurrency industry first took root, it was a mostly unregulated affair. Exchanges opened and operated with relatively minimal oversight, laws regarding cryptocurrency were non-existent and the use of cryptocurrency for crime was common. As the industry has matured, however, these issues have been addressed. More laws exist to govern everything from Initial Coin Offerings to tax payments, crypto-related crimes are being prosecuted more than ever and the industry has become better regulated.
One of the steps to regulating the industry has been the issuing of licenses in certain jurisdictions. For example, the Bitlicense is required in the state of New York for any firm that wants to deal with digital assets as part of their business.
License to Operate
While licenses such as the Bitlicense go a long way to create order and accountability within the industry, it seems many firms are seeking out more ‘traditional’ licenses that are usually only accorded to mainstream institutions. Crypto exchange Plutus recently announced plans to pursue a banking license, launch in Latin America, launch in Asia, and rapidly scale the business. It should be noted that the company is not targeting a crypto-related license but a license typically reserved for banks.
This sort of development speaks to the advancement of cryptocurrency-related firms and the growing acceptance of cryptocurrency. Digital tokens can, in many ways, be classified as money and it then makes sense that a firm that deals in it would have a banking license of some sort.
They also revealed their Pluton Liquidity Injection Programme (PLIP) which involves partnerships with five exchanges and several micro-sales. The first sale is currently taking place on their own internal platform, the PlutusDEX. PLU is being sold at $8 and the exchange has implemented several unique features that have made it incredibly successful, such as a 40% bonus.
Whatever a user pledges for, they receive a 40% bonus in PLU on top, an extremely high bonus rate that you don’t see elsewhere. There is also a cancellation policy – meaning participants could cancel their pledge if they changed their minds. The sale was oversubscribed in just 48hrs and Plutus had to extend the sale to accommodate the demand and now ends in 24hrs on Oct 13.
The Meaning of Money and the Impact of Banking Licenses
There has been debate as to whether cryptocurrencies are to be classified as money in the traditional sense or whether they are assets. Regardless of what stance is supported, it cannot be denied that institutions that deal mostly with cryptocurrency are financial institutions and should not be limited in their applications. The influx of institutional support for the industry and the increase in crypto holders means that in the next decade, the average investment portfolio will be as likely to have bitcoin as it would stock for a multinational company.
Banking licenses for cryptocurrency industries would therefore go a long way to aid the progress of the industry. First, it would mean that cryptocurrency products would be more accessible than ever before. In parts of the world such as India, there have been reports of cryptocurrency-related firms being denied banking services as a whole. Should the industry be able to secure traditional banking licenses, it would not only shake off concerns about the legitimacy of the industry but help to by-pass discrimination as well.
Crypto Firms Building Communities
While firms like Plutus have been seeking out a banking license, they have also made new announcements regarding their community, specifically their PLU token. First, there is now a price-floor guarantee. This means that the minimum rate of PLU on the PlutusDEX has been locked at $8 for 90 days meaning participants can sell PLU back at the same rate they purchased it (limits apply).
This also comes with premium membership – All participants will automatically get a 6-month free membership worth £/€9.99 per month. It is expected that the company will announce updates to their applications for banking licenses. The success the firm could experience following a possible approval will help to shed the light on how banking licenses could benefit crypto firms. Over the next decade, we might very well see crypto firms work alongside traditional banks for a more inclusive financial ecosystem.
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