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Two Seed CX Subsidiaries Granted New York BitLicense

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The New York State Department of Financial Services or DFS granted virtual currency license, known as a BitLicense, to two subsidiaries of U.S.-based cryptocurrency exchange Seed CX, backed by Bain Capital, to provide virtual currency services for institutional customers across the State of New York.

The approval of these new licenses will protect consumers and the public through strong anti-money laundering, cybersecurity and other compliance, DFS said in a statement.

DFS said it has authorized Seed Digital Commodities Market LLC (SCXM) to serve as a matching engine for buyers and sellers of cryptocurrencies such as Bitcoin and as a platform for cryptocurrency block trades, for large financial institutions and trading firms.

It also authorized Zero Hash LLC to function as the money transmitter for the trading activity resulting from its affiliated exchange, SCXM. Zero Hash is a FinCen regulated Money Service Business and Money Transmitter in over 25 U.S. States.

Through its subsidiaries, Seed CX offers a licensed institutional-grade digital asset exchange for spot trading and plans to offer a market for CFTC-regulated digital asset derivatives.

Seed CX launched spot trading in digital assets or cryptocurrencies such as Bitcoin for institutional investors like hedge funds in late January. It initially opened spot trading for BTC to US dollar trading pair. It then added US dollar pairs with ETH, LTC and BCH by mid-March. It also added support for three U.S. dollar-backed stablecoins to its platform in mid-May.

The state had introduced BitLicense in August 2015 to support crypto customers following many incidents of Bitcoin exchanges getting hacked and people losing their holdings. This is the 20th BitLicense application that the DFS is granting since the initiation.

Recently, DFS granted BitLicense to Bitstamp USA Inc., institutional-grade cryptocurrency trading platform Tagomi Trading LLC as well as Crypto trading app Robinhood Crypto LLC. In April, the DFS also denied the license to U.S.-based cryptocurrency exchange Bittrex for failure to meet the licensing requirements.

The controversial BitLicense regulatory framework is aimed at monitoring and regulating operations of cryptocurrencies such as Bitcoin and cryptocurrency-related products being offered in the State of New York and to New York residents.

BitLicense is dubbed as one of the most restrictive cryptocurrency regulatory frameworks in North America. More than fifteen digital currency companies left the New York state because of the new regulations, including Vaultoro, Shapeshift, Paxful, Poloniex, Bitfinex, Kraken, and more. This was called "Great Bitcoin Exodus."

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