Two of the oldest and best-known startups in the crypto space are seeking to become highly regulated financial firms, underscoring how compliance with securities laws (not just anti-money-laundering rules) has grown in importance amid the token explosion.
Circle, the wallet, trading and investment platform, is reportedly pursuing a federal banking charter in the U.S., and it also hopes to be licensed as a brokerage and trading platform. Not to be outdone, fellow exchange Coinbase said it was making strides toward the goal of operating a federally regulated broker-dealer, with pending acquisitions of three licensed firms.
In both cases, part of the aim is to be able to list tokens that U.S. law deems securities. Circle also cited among its motivations federal preemption – that is, answering to one regulator in Washington, D.C., rather than 50 different states – and the benefits of being plugged into the Federal Reserve system.
But many users are likely to view the Circle and Coinbase moves as a betrayal of the ideals behind the technology that gave these unicorns their original raison d’etre.
CREATIVES and IMCA ambitions
CREATIVES has since the inception in September 2017 (Estonia) always expressed the intention of NOT becoming an Exchange nor an payment service.
The answer from the Estonian finance inspection :
Thank you for the documents and for keeping us updated with your plans.
We have analysed your memorandum and can provide you with the following feedback.
- The codes and CRCs to be issued within the framework of the pre-sales and the ICO do not qualify as financial instruments.
- None of the entities of the Group qualify as payment institution since at the moment being, cryptocurrencies are not considered as e-money and as such do not fall under the Finantsinspektsioon’s supervisory area. However, it is important to note that our finding may change in the course of restructuring of your business activities. For example, an additional legal analysis may be needed if the Internet Music Exchange (IME) was not to pay the royalties to direct addressees but the addressees would have a discretion to change the receiver.
- The AML rules may apply to the Internet Music Copyright Foundation (IMCF) in terms of organising the ICO. In certain cases, we also think that AML rules may apply to IME. That being the case, it would be required to obtain an authorisation for providing the services of alternative means of payment. The issuer of this authorisation is the Financial Intelligence Unit (FIU). Therefore, in order to receive a respective exhaustive opinion and confirmation, we advise you to contact directly the FIU. Their contacts are to be found on the website: https://www.politsei.ee/en/organisatsioon/rahapesu-andmeburoo/.
Please note that this is our specialists’ opinion and solely based on the information you have made available to us. Such an opinion might not apply in case of changes in the legal framework or your business structure or ICO offering etc.
I hope you find this information helpful and that you keep us updated with your further steps.
Please do not hesitate to contact us in case you have any further questions.
Estonian Financial Supervision Authority
Market Supervision & Enforcement Division