stock brokerage platform offering deposit of crytocurrency to purchase stocks

farmountain

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Quote from: squatter on February 29, 2020, 01:39:44 AM

Quote from: farmountain on February 29, 2020, 12:31:50 AM

Lets assume a team has a stock brokerage company registered in Jurisdiction outside of USA, e.g. Singapore or Australia.

1. If this stock brokerage want to add cryto exchange to their business, and offer crytocurrency trading account opening and deposit of crytocurrencies to USA Citizens. Is it a "must" to register the company with SEC?

Yes. The operator of a similar platform was subject to an SEC enforcement action because he failed to register with the SEC as a securities dealer.

If you don't want to register, you need to prohibit US customers, and you should probably implement some basic measures like IP geolocation bans to cover yourself legally.

Quote from: farmountain on February 29, 2020, 12:31:50 AM

2. What if this stock brokerage works with P2P crytocurrency merchants to allow clients to convert the crytocurrency into USDT, and use USDT to purchase stocks via custodian account? What will be the relevant legal concerns in this case?

It won't make a difference whether you use bitcoins, USDT, euros, or whatever. These requirements pertain to the service itself, not the type of collateral customers use.

Thanks Squatter

UserU

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My passive income eBook @ tinyurl.com/PIA10

Quote from: squatter on February 29, 2020, 02:40:03 AM

There is all sorts of red tape before the SEC will let you do business:

Quote

A broker-dealer may not begin business until:

• it has properly filed Form BD, and the SEC has granted its registration;
• it has become a member of an SRO;
• it has become a member of SIPC, the Securities Investor Protection Corporation;
• it complies with all applicable state requirements; and
• its "associated persons" have satisfied applicable qualification requirements.

Then there's all the record keeping and periodic disclosure requirements. There are also fees to consider too. Then you need to pay lawyers who can see that everything gets done properly.

I can see why brokers -- especially small ones -- would want to avoid this entirely.

Shit, that's sure hella lot of red tape.

And not just small timers; even renowned players like eToro just recently opened their doors to the US market.

squatter

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STOP SNITCHIN'

Quote from: UserU on February 29, 2020, 02:10:10 AM

Quote from: squatter on February 29, 2020, 01:39:44 AM

Yes. The operator of a similar platform was subject to an SEC enforcement action because he failed to register with the SEC as a securities dealer.

If you don't want to register, you need to prohibit US customers, and you should probably implement some basic measures like IP geolocation bans to cover yourself legally.

It won't make a difference whether you use bitcoins, USDT, euros, or whatever. These requirements pertain to the service itself, not the type of collateral customers use.

I just wonder, why many forex brokers don't want to register with SEC?

There is all sorts of red tape before the SEC will let you do business:

Quote

A broker-dealer may not begin business until:

• it has properly filed Form BD, and the SEC has granted its registration;
• it has become a member of an SRO;
• it has become a member of SIPC, the Securities Investor Protection Corporation;
• it complies with all applicable state requirements; and
• its "associated persons" have satisfied applicable qualification requirements.

Then there's all the record keeping and periodic disclosure requirements. There are also fees to consider too. Then you need to pay lawyers who can see that everything gets done properly.

I can see why brokers -- especially small ones -- would want to avoid this entirely.

UserU

hero member

Activity: 2254

Merit: 537

My passive income eBook @ tinyurl.com/PIA10

Quote from: squatter on February 29, 2020, 01:39:44 AM

Yes. The operator of a similar platform was subject to an SEC enforcement action because he failed to register with the SEC as a securities dealer.

If you don't want to register, you need to prohibit US customers, and you should probably implement some basic measures like IP geolocation bans to cover yourself legally.

It won't make a difference whether you use bitcoins, USDT, euros, or whatever. These requirements pertain to the service itself, not the type of collateral customers use.

I just wonder, why many forex brokers don't want to register with SEC? At a glance, it seems that US forbids its citizens from registering but I feel the whole process should be more of less the same as other regulations, right?

squatter

legendary

Activity: 1666

Merit: 1196

STOP SNITCHIN'

Quote from: farmountain on February 29, 2020, 12:31:50 AM

Lets assume a team has a stock brokerage company registered in Jurisdiction outside of USA, e.g. Singapore or Australia.

1. If this stock brokerage want to add cryto exchange to their business, and offer crytocurrency trading account opening and deposit of crytocurrencies to USA Citizens. Is it a "must" to register the company with SEC?

Yes. The operator of a similar platform was subject to an SEC enforcement action because he failed to register with the SEC as a securities dealer.

If you don't want to register, you need to prohibit US customers, and you should probably implement some basic measures like IP geolocation bans to cover yourself legally.

Quote from: farmountain on February 29, 2020, 12:31:50 AM

2. What if this stock brokerage works with P2P crytocurrency merchants to allow clients to convert the crytocurrency into USDT, and use USDT to purchase stocks via custodian account? What will be the relevant legal concerns in this case?

It won't make a difference whether you use bitcoins, USDT, euros, or whatever. These requirements pertain to the service itself, not the type of collateral customers use.

farmountain

newbie

Activity: 22

Merit: 0

Lets assume a team has a stock brokerage company registered in Jurisdiction outside of USA, e.g. Singapore or Australia.

1. If this stock brokerage want to add cryto exchange to their business, and offer crytocurrency trading account opening and deposit of crytocurrencies to USA Citizens. Is it a "must" to register the company with SEC?

2. What if this stock brokerage works with P2P crytocurrency merchants to allow clients to convert the crytocurrency into USDT, and use USDT to purchase stocks via custodian account? What will be the relevant legal concerns in this case?

Thanks

Topic: stock brokerage platform offering deposit of crytocurrency to purchase stocks (Read 167 times)