News

Cryptocurrency Exchanges Use the Backdoor to Get Listed in Markets

Many cryptocurrency exchanges are using the backdoor to get into the crypto marketplace in certain regions. The latter is made possible by purchasing a share in a public company that has already been listed, and as such, it helps to avoid regulations and gain greater mainstream acceptance, reports Reuters on February 22.

Buying Shares in Existing Companies to Avoid Regulations

According to the report, certain cryptocurrency exchanges have taken steps to buy shares in already licensed and listed companies. As a result, this eliminates the cumbersome process they would have had to undergo as a fresh entrant into the market. It also holds a promise of giving these companies greater acceptance in the market.
The media also outlined that these purchases are also called reverse mergers which enables companies to offer share to the public. That being the case, the buying company avoids the scrutiny that would have been brought about during an initial public offering (IPO) and even the regulations by financial regulators.

Instances of Purchased Companies to Aid Listing in Jurisdiction

An instance of this which was pointed out is the listing of Voyager Digital, a U.S. cryptocurrency broker-dealer on Toronto’s Venture Exchange. The event came about after Voyager Digital was able to buy control of UC Resources, a mineral exploration firm.
In the same vein, OKC Holdings, a company that is managed by Star Xu, OK Coin’s cryptocurrency exchanges founder was able to purchase 60.5 percent of LEAP Holdings for HK$484 million (about $61 million). LEAP Holdings is reportedly a construction firm that is listed in Hong-kong.
In a statement with the Reuters, Fei Ding’an managing partner at Ledger Capital, a digital asset investment firm said:

“Many (cryptocurrency) exchanges have put a lot of strategic effort into trying to legitimize their operations and their reputations, and for some there’s an assumption that having some exposure to the traditional public market will help

Japan’s FSA Outlines Framework Governing Digital Assets

It is also worthy to note that Japan’s Financial Services Agency (FSA) is the only regulator that has outlined a framework to govern digital assets. The same can be said about the regulations guiding the exchanges where these assets are traded. Moreover, a company that intends to offer its services in the area must adhere to the “Under the revised Payment Services Act” by registering with the FSA.
In line with that, BTCNN on December 28 reported that Japan’s FSA had revealed that a total of 190 companies showed an interest in launching crypto-related businesses in the East Asian country.  On January 10, it was also reported that the Thai Securities and Exchange Commission (SEC) had reviewed seven cryptocurrency companies. Four out of these were licensed, two rejected, and one was still undergoing review.

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