Cryptocurrency trading platform, SFOX, announced Tuesday that it has partnered with M.Y Safra Bank, a New-York based financial institution to roll out a landmark feature for its over 170,000 users.
The new feature called “Segregated FBO Account” allows a user to choose whether to keep their cash reserve on SFOX within FDIC-insured accounts with coverage for funds up to $250,000. Before now, SFOX was primarily responsible for holding customer cash, but now users can opt to keep those funds on their FDIC-insured bank accounts, thus making it easier for them to access it for trading.
SFOX notes in its announcement that this is the first time that a crypto-trading firm could offer such a high level of regulated insurance policy to its clients. The U.S Federal Deposit Insurance Corporation (FDIC) also provides the same insurance to commercial banks and other savings institution.
SFOX to Avoid QuadrigaCX Situation
In an interview with Bloomberg, SFOX Head of Growth, Danny Kim explained that the latest development would among other things save the firm from finding itself in a situation similar to the now-defunct Canadian cryptocurrency exchange, QuadrigaCX.
Since QuadrigaCX went bankrupt following the death of its founder, SFOX hopes that the new features will mitigate such risks by allowing users keep funds in their FDIC-insured bank accounts and at the same time allow them access to it anytime they want.
“When the court is trying to retrieve the money, they don’t know whose funds are whose,” Kim said regarding QuadrigaCX’s ongoing court case.
Meanwhile, although QuadrigaCX’s experience was undoubtedly an ugly one for the crypto industry, it has turned out to be a lesson for both exchanges and regulators. Following the exchange’s shut down Stmarket.co reported that Canadian regulators have now released proposed regulations for similar business operators.