PRESS RELEASE: Crypto Traders Now Get FDIC Protection via SFOX

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May 15, 2019
PRESS RELEASE: Crypto Traders Now Get FDIC Protection via SFOX
May 15, 2019

The cryptocurrency market is slowly moving towards maturity. Recently, prime dealer and trading system SFOX announced FDIC protection for crypto traders.

From Wild West to market maturity

The unregulated cryptocurrency market is now slowly opening up to more market safety measures. In a recent move, SFOX announced that it would be partnering with M.Y. Safra Bank from New York to provide Federal Deposit Insurance Corp. (FDIC) deposit accounts to cryptocurrency traders. FDIC currently provides bank customers up to $250,000 of protection per financial institution. Its entry into the $208 billion crypto market shows institutional interest in digital currency.

This is the first time in the decade-old existence of digital currencies that an FDIC- insurance account will be linked to a crypto prime dealer. SFOX will allow traders to keep funds in accounts in their own names. Traditional banks are still not open to the possibility of allowing customers to open their cryptocurrency accounts with them. SFOX, on the other hand, will provide FDIC insurance on the cash side of the crypto trade. The protection will not be applicable on Bitcoin, Ethereum or other crypto assets.

Moving ahead to the future

According to SFOX’s head of growth, Danny Kim, Safra Bank sees where the digital currency market is growing and consider it a part of the future. Partnering with them will allow the company to reduce the time needed to make funds available for trading. This will help make trading more efficient. SFOX already has about 175,000 users spanning across family offices and other institutional and retail investors. The company connects its crypto traders to exchanges like Kraken, Gemini, and ItBit. However, users have to register on each of the exchanges separately and put up cash for each of the exchanges.

Kim noted that these segregated accounts would help in protecting traders as they will be allowed to hold their own cash. There will not be an omnibus account linked to an exchange, giving users more control over their money. He added that the troubles faced by investors in the Quadriga CX case would not have occurred if they followed an individual-account structure. The court doesn’t know whose money it has retrieved because of the lack of individual accounts.

The popular Canadian exchange shut down earlier this year after its founder’s death, leaving thousands of investors stuck. The exchange owes millions of dollars in cash and cryptocurrencies to investors but doesn’t have enough assets to pay back.

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