Crypto trading platform FairX shuts down

21 Jul, 2019 | Updated: 21 Jul, 2019
by David Robb
News
Crypto trading platform FairX shuts down

Crypto trading firm FairX has been forced to shut down. A thread on the company's official Twitter account, posted July 18, explained that it was unable to secure funding for a bank license.

According to the tweets, FairX has been "on a tear" for the past 14 months trying to get the required financial backing to gain a banking license from the Federal Deposit Insurance Corporation (FDIC). The firm was operating a crypto trading platform, and had a major business goal of establishing a new national bank.

This bank was intended to provide a "dematerialized deposit" to crypto traders, which would be similar to a USD-pegged stablecoin, but with some key differences. FairX claims that most stablecoins are "doomed for failure", as the reserves backing them are not secured, and their issuers aren't sufficiently liable for their customers' cash deposits.

FairX had apparently been encouraged to apply for a license from the FDIC, and insisted that the KYC/AML rules that companies must comply with are much more reasonable than many in the crypto space have claimed. However, FairX needed capital between $150 million and $250 million to apply for the license. Due to the legal specifics of fundraising for a bank, which differ from other types of startup, it was particularly difficult to get traditional VCs or crypto investors interested in the project.

In June, when it became clear that the company wasn't going to raise sufficient capital, the FairX team decided that they wouldn't be able to continue with the project.

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