New York regulators have provided their approval of listing Stellar Lumens (XLM) to the itBit cryptocurrency exchange. This is the first time New York has granted permission to an exchange to trade in the coin. New York’s BitLicense requirements are strict (and expensive), so we can only speculate on what hoops itBit must have hopped through in order to take this step.
One clue in the decision-making process is that itBit is a platform designed specifically for institutional investors, meaning that retail investors would not be trading against XLM on the platform. This does make the approval process easier, in that it eliminates the concern that unsophisticated investors would be scammed into losing their money.
Prior to this, itBit only offered Bitcoin trading. The exchange also received approval from the New York Department of Financial Services (NYDFS) to add Bitcoin Cash, Ethereum, and Litecoin. With all of these options on their exchange, itBit becomes extremely competitive with Coinbase and Gemini, within the institutional marketplace.
There is another first here. The itBit exchange was the first company in the industry to be granted a banking law charter from NYDFS, three years ago. This is a broader authorization than BitLicense and puts itBit in a league of its own.
Although this is big news, another exchange was awarded a BitLicense. Xapo offers Bitcoin custodial services, by physically storing private keys in an underground vault in the Swiss Alps. Altogether, there are six companies that have been granted BitLicense, and which are therefore permitted to operate in New York State.
Stellar Lumens is a top ten cryptocurrency by market capitalization, according to CoinMarketCap.com. It was created by Joyce Kim and Jed McCaleb, the creator of eDonkey and the CTO of Ripple until 2013. McCaleb also created the Bitcoin exchange, Mt. Gox, and has a net worth in the tens of billions. The coin itself has a market cap of over $4.3 billion, and with this approval, it appears as though New York regulators do not view XLM as a security. This news comes at the same time as the federal SEC announcement that Ethereum would not be considered a security.
Chad Cascarilla, co-founder and CEO of itBit’s parent company, Paxos, said in an interview with Fortune, “That’s why we’ve added them to the exchange. If they were a security, you’d have to go through a different process.”
This latest deal is significant in that it may make it easier for other exchanges to list XLM. Should this happen, we might see the price of the coin to increase. It should also be noted that Stellar has use cases that may add value, too. For example, like Ethereum, Stellar has the coding framework required to enable users to create smart contracts, and new tokens on its platform. It’s optimized for IoT (Internet of Things), so it’s also possible that more project creators will begin to adopt it as their ICO platform of choice.
The price of XLM rose by 5% upon news of itBit’s approval in New York. We can expect more findings along the way.