May 20, 2024

European Banks in Discussions with Bitstamp for Crypto Services, Fueled by MiCA Confidence

Bitstamp, one of the longest-standing cryptocurrency exchanges, is reportedly in discussions with three major European banks regarding the provision of cryptocurrency services, with plans to potentially launch these services around the first quarter of the upcoming year. This development is seen as a consequence of the European Union’s regulatory framework, Markets in Crypto Assets (MiCA), which appears to be facilitating traditional financial institutions’ entry into the cryptocurrency space.

European Market vs. U.S. Regulatory Environment

This news highlights a sharp contrast between the European and U.S. regulatory landscapes. In Europe, the establishment of comprehensive rules and regulations has paved the way for conventional financial firms to engage with digital assets confidently. In contrast, the United States has been cracking down on cryptocurrency activities, leading traditional firms to exercise caution and prompting some crypto companies to consider relocating their operations elsewhere.

Role of Bitstamp in Facilitating Crypto Services

Bitstamp has been receiving substantial interest in its Bitstamp-as-a-service offering in Europe. This service, which combines white-label licensing with technology solutions, is designed to assist banks and fintech companies in offering cryptocurrency buying and selling services. The exchange has reported a surge in inquiries about this offering from prominent European banks over the past six to nine months. Bitstamp’s Global Chief Commercial Officer and CEO of its U.S. division, Robert Zagotta, has stated that advanced discussions are underway with three significant European banks, and announcements regarding these partnerships are expected in the first quarter of the upcoming year. The names of the banks involved have not been disclosed.

Regulated Perpetual Swap Product and Governance Focus

Bitstamp has also noted increased demand in Europe for a fully regulated perpetual swap product. The exchange has been actively working on fulfilling this demand.

Bitstamp’s approach to regulation and governance is seen as a key factor contributing to its success, particularly in light of regulatory challenges faced by competitors like Binance and the collapse of FTX. Bitstamp’s emphasis on compliance and adherence to regulatory standards has garnered trust among its corporate clients. The exchange reported a 36% increase in onboarded corporations during the first half of 2023 compared to the second half of 2022, partly attributed to FTX’s exit from the market, which led to a redistribution of market share.

Concerns About Market Disruption

While discussing the crypto industry’s landscape, Zagotta expressed concerns about the potential for market disruption in the event of a major player, such as Binance, facing regulatory challenges or other issues. He emphasized the need for a level playing field across the industry and the hope for balanced and fair regulatory oversight.