Bitstamp

Stablecoins are solution to crypto’s banking problem, exec says

Stablecoins are seen as a potential solution to crypto’s banking problem, but some of them are currently not immune to banking issues.

The collapses of banks like Silvergate have certainly impacted cryptocurrency exchanges but there are ways for the industry to survive without the support of banks, one executive believes.

Crypto exchanges significantly rely on traditional banking systems for customer deposits, which makes them vulnerable to various banking issues, according to Bitstamp USA CEO and global commercial officer Bobby Zagotta.

The executive believes that stablecoins — cryptocurrencies whose value is tied to fiat currencies or other assets — could be a solution to crypto’s banking problem.

“We are currently discussing how stablecoins can offer us an alternative to traditional banking,” Zagotta said in an interview with Cointelegraph on March 27. He added that stablecoins could potentially unlock new capabilities for the industry, allowing it to look at banking from a new perspective and to go back to the genesis and purpose of crypto, adding:

“One of the founding principles of our industry is to enable individuals to transact without dependence on third-party institutions, so there are other possibilities to be explored, such as the use of stablecoins to reduce frictions born of the banking system.”

According to Zagotta, stablecoins provide many benefits like faster and more cost-effective transactions, reduced reliance on banks and increased liquidity. “Depending on regulations it’s possible we will see a continued evolution and integration of stablecoins within exchanges amid the banking crisis,” the exec stated.

In the interview, Zagotta emphasized that the crypto industry needs to figure out the factors that led regulators to step in at Signature bank. That is necessary for the industry to ensure that crypto-friendly banks are operating in a safe and sustainable manner moving forward. He also cautioned exchanges against creating more risk for customers by hastily moving customer funds around different U.S. banks that may be stressed or at risk.

Related: Coinbase wants devs to build inflation-pegged ‘flatcoins’ on its new ‘Base’ network

According to the exec, Bitstamp currently has 15 banking partnerships globally, including U.S. banks like Customers Bank and MVB Bank, as well as European banks like LHV Bank and Gorenjska Banka that can process payments in USD as well. “We are also in conversations to onboard United Texas Bank, Western Alliance Bank, Axos Bank, and Cross River Bank to ensure we maintain a robust network in the midst of all of this change,” Zagotta added.

While Bitstamp is looking at stablecoins as a potential solution to crypto’s banking problem, it’s worth noting that some major stablecoins like USD Coin (USDC) aren’t immune to banking problems themselves. USDC issuer Circle faced major issues in March due to its $3.3 billion exposure to the collapsed Silicon Valley Bank (SVB). The events caused USDC to briefly lose its 1:1 peg with the U.S. dollar.

According to media reports, the banking crisis has been subsiding over the past few weeks but isn’t close to being over. According to José Manuel Campa, the head of the European Banking Authority, European banks have remained vulnerable following the demise of SVB and the subsequent emergency rescue of Credit Suisse by UBS.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Bitstamp gets a crypto license from the Bank of Spain

The EU-based exchange became the 46th crypto business to obtain a permit to offer virtual currency exchange services for fiat currency in the country.

Crypto exchange Bitstamp reported obtaining a license for operations with crypto in Spain. It marks approval in yet another European jurisdiction for an exchange, which has been focusing on the European Union market since its launch in 2011. 

The company revealed the news about its Spanish license on Nov. 17. The approval from the Bank of Spain lets Bitstamp’s local subsidiary offer digital currency exchange services for fiat currency and electronic wallet custody services to Spanish users. Bitstamp became the 46th virtual asset provider to receive a license in Spain, following the likes of Binance and Bitpanda.

Spain has recently demonstrated a moderate approach to crypto regulation, which goes hand in hand with a high pace of adoption in the country. In January, the local financial regulator Comisión Nacional del Mercado de Valores (CNMV) announced a set of rules for crypto-asset investments advertising, demanding them to be “clear, balanced and fair.”

Related: Head of Bitstamp’s European arm becomes latest CEO of global crypto exchange

By this fall, the country became home to the third-largest network of Bitcoin (BTC) and cryptocurrency ATMs after the United States and Canada. It currently hosts 215 crypto ATMs, pushing El Salvador — with 212 — down to the fourth position after surpassing the country by the ATMs.

In September, the multinational telecom company based in Madrid, Telefonica, enabled payments with cryptocurrencies like Bitcoin and many others on its online tech marketplace called Tu. The firm integrated a crypto payment feature provided by the Spanish crypto exchange Bit2Me to receive crypto in exchange for their tech products.

Bitstamp has been increasing compliance efforts in recent years. In April, it requested users to update the origin of cryptocurrencies stored on the platform for regulation purposes. The exchange provided an official list of examples of documents clarifying fiat-related sources of wealth of deposited funds, including salary and pension payslips, inheritance documents, payslips for savings, gifts, mining receipts and others.

Trust in crypto remains strong despite bear market: Bitstamp survey

Despite the downward market, global trust in cryptocurrencies like Bitcoin remains mostly unshakable, with countries like the U.S. showing more trust in crypto in Q2.

The ongoing cryptocurrency winter has had little to no impact on global trust in crypto, this was the conclusion reached new study commissioned by Bitstamp exchange.

Despite the downward market, global trust in cryptocurrencies like Bitcoin (BTC) remains mostly unshakable, Bitstamp said in its latest Crypto Pulse report. The study is based on a survey conducted by an independent research firm and involves 28,000 retail and institutional investors in 23 countries, Bitstamp said.

The survey suggests that the percentage of global retail investors who find crypto trustworthy has slightly dropped from 61% in Q1 to 65% in Q2 2022. The survey signaled a similar trend among institutional investors as 67% of respondents deemed crypto trustworthy in Q2 versus 70% in Q1.

“Considering that in Q1 we were entering a crypto winter, these numbers are inspiring and speak in favor of the industry’s resilience,” Bitstamp analysts noted.

The crypto trust percentage has varied from country to country, with the United States seeing the single biggest increase in trust, from 61% in Q1 to 73% in Q2, according to the report. In contrast, Canada was the only country that saw trust in cryptocurrency dip below 50% in Q2. Trust in crypto also remained high in countries like Brazil, Chile and Mexico, with trust percentage accounting for 77%, 69% and 70%, respectively.

“We can see that crypto has, for the most part, maintained the trust of many investors and institutions across the world during a difficult time for the sector,” Bitstamp said. In the meantime, some fluctuations in trust in certain countries are certainly to be expected, the firm noted, adding:

“Although trust in crypto has declined slightly in some regions, investors are taking this time to either increase their investment or expand their knowledge of crypto. We believe that improving the market’s knowledge about the digital assets ecosystem is a move in the right direction.”

Bitstamp CEO JB Graftieaux added that the crypto winter will provide an opportunity for both retail and institutional investors to build for the future.

Related: 62% of wallets did not sell Bitcoin for a year amid the bear market: Data

As previously reported by Cointelegraph, the current bear crypto market is associated with an ongoing crisis of cryptocurrency lending, with major lenders like Celsius halting withdrawals amid liquidity issues in June. The crypto winter is also largely linked to issues of algorithmic stablecoins after the TerraUSD Classic (USTC) stablecoin lost its United States dollar peg in May.

Bitstamp cancels ‘inactivity fee’ plans after huge backlash

Bitstamp makes a U-turn on the planned €10 ‘inactivity fee’ against users after widespread criticism, cites administrative fees as the reason for the proposed move.

Luxembourg-based cryptocurrency exchange Bitstamp has scrapped plans to implement an inactivity fee after widespread outcries from users online.

The exchange had previously announced at the end of June that it would enforce a €10 ($1fee on inactive users on its platform with account balances valued at €200 ($204.08) or less from the beginning of August.

The inactivity fee was due to be applied to users of Bitstamp Limited and Bitstamp Global Ltd from  Aug. 1 and for customers of Bitstamp Europe S.A. from Aug. 6. Bitstamp users based in the United States were exempt from the proposed fee, according to the company’s fee schedule.

The move was met with condemnation from users on social media, with prominent cryptocurrency accounts among the chorus of voices hitting out against the exchange’s proposed plans.

Cointelegraph reached out to Bitstamp to ascertain why the initial decision was taken to implement the inactivity penalty and whether the current downturn across cryptocurrency markets played a role in the now-scrapped move.

A spokesperson from the exchange cited administrative costs incurred by maintaining inactive accounts as the primary reason for implementing the proposed inactivity fee. Bitstamp had been considering the idea since last year while reaffirming that current market conditions did not play a role in the move.

The spokesperson agreed that there was turmoil across the crypto markets but noted that Bitstamp has “zero exposure to any of these companies, that our financial position remains strong and healthy, and that we are continuing to invest in our product and technology.”

Related: Hardware crypto wallet sales increase as centralized exchanges scramble

The company has since removed the initial announcement from its website and social media accounts but the Bitstamp fee schedule page still reflects the details of the inactivity fee. The company also confirmed that some users had requested to close their accounts after the initial announcement of the proposed fee.

Users that had been inactive for more than a year would have had to buy or sell cryptocurrency on the exchange, make a fiat or cryptocurrency deposit or withdrawal or stake on Bitstamp Earn to avoid incurring the fee.

Bitstamp had planned to deduct €10 from an inactive user’s fiat currency balance, or the equivalent amount from their cryptocurrency holdings if their fiat balance was lower than the penalty.