Setting up a cryptocurrency exchange in the United States is more than an uphill struggle, and depending on where you are, it’s an impossibility unless you live in those states adopting a more crypto-positive perspective.
Among those blockchain initiatives looking to break into the US is Riot Blockchain, which has recently announced that it intends to launch a fully regulated exchange in America.
While the company has, in the past, experienced some major regulatory issues due to its recent and, quite surprising pivot over to blockchain, revealed that it was filing the necessary paperwork with the regulatory organization – The US Securities and Exchange Commission (SEC) late this past week.
According to Riot, its new entity will be referred to as ‘RiotX’, and will be responsible for providing these three services to end-users – Banking, digital asset trading, and a dedicated digital asset wallet.
What makes this transition so drastic is the fact that, before this pivot, the business had focused predominantly on biotech over two decades, after this lineage came to an end, Riot Blockchain moved from biotech to delve into the world of Cryptocurrency mining as of October 2017. After this, the company had successfully obtained a crypto brokerage platform, going further to say that it intended to create an exchange as of March 2018.
Shortly after these announcements, the company was officially subpoenaed by the Securities and Exchange Commission due to this drastic pivot, resulting in a hike in stock prices.
If this wasn’t enough of a tumultuous event for Riot, over the course of 2018 and 2019, it had committed a major overhaul of its board of directors, along with seeing its CEO resign.
Over the course of being submitted before the SEC, the company made it publically aware that its new exchange would be handled and managed by one of its subsidiary bodies – RiotX Holdings Inc, re-affirming that its focus for the foreseeable future was on Bitcoin mining operations.
The services that RiotX wants to provide would require an extensive amount of regulation and security in order to perform up to regulatory standards. In order to accomplish this, the company has stated that it will be making use of an API product which was developed by SynapseFi.
Thanks to this software, users would be able to establish an online account which would be directly and immediately linked to accredited banking organizations in operation within the United States. This would allow users to hold, transfer, buy and sell fiat and crypto assets securely.
What makes this API useful for RiotX is the fact that it will be able to map out and track the locations and identities of any of its users. According to the developers, this is “in order to prevent fraud and improper use of its RiotX Exchange.” This API, in particular, also involves the use of services within the United States, where crypto exchanges are not legally permissible.
Riot Blockchain goes on to explain within its registration application to the SEC:
“SynapseFi’s API will enable to Company to know where the user is when accessing RiotX, thereby enabling the Company to prevent a user from Montana, a state where the exchange of digital currencies is permitted, from traveling to neighboring Wyoming, where the exchange of digital currencies is not permitted, and using RiotX in the prohibited jurisdiction.”
When it comes to the company’s upcoming trading services, the company went on to state that it would be working closely with the digital exchange software developer and provider – Shift Markets – made public since the companies announcement that it would officially be terminating its existing contract with the Canadian exchange company, Coinsquare, during the same time that the SEC’s investigation began.
The firm is confident that RiotX will be able to begin operation within the United States, with the exception of Hawaii and Wyoming. It forecasts that it will be available to users by the latter quarter of 2019. Up to this point in time, the company has since claimed to have already been approved in five US States.