Vancouver-based Netcoins aims to give consumers the option of dealing with a brokerage that is licensed and regulated by the B.C. Securities Commission
Cryptocurrency’s days as a haven for scoundrels may be numbered. This week the parent company of Vancouver-based online exchange Netcoins, BIGG Digital Assets, applied for registration from the B.C. Securities Commission—an invitation for government oversight of the sector, which has hitherto been tainted by get-rich-quick schemes, fraud and money laundering.
“It’s fairly onerous for us as a business. It’s taken us two years, and we’ve spent a ton of money with lawyers and consultants, but at the end of the day we see this as a very necessary piece to make sure that there is trust [in the marketplace],” says Netcoins president Mitchell Demeter, who was behind the installation of the world’s first bitcoin ATM in a downtown Vancouver café in 2013. Netcoins is strictly an online platform for buying and selling seven different cryptocurrencies.
Demeter sees regulation as a way to overcome consumer distrust of cryptocurrency, which he believes is obstructing the sector’s growth. Cases like the collapse of the B.C.-incorporated QuadrigaCX exchange following the suspicious death of its co-founder and CEO, James Cotten, last year—leaving 76,000 account holders at least $169 million out of pocket—have caused most people to steer clear of the asset class. Vancouver Mayor Kennedy Stewart has made moves to ban bitcoin ATMs in the city because he believes they facilitate moving the proceeds of crime.
Still, bitcoin and other blockchain-based digital currencies have gained new relevance amid central banks’ rush to increase the conventional money supply post-COVID-19, which some economists believe will lead to higher real inflation and erode the purchasing power of the U.S. dollar and other national currencies. The number of bitcoin, by contrast, is more or less fixed; the units should in theory retain their purchasing power.
By registering with the BCSC and the Canadian Securities Administrators, “Netcoins will be the first registered open-loop crypto trading platform in Canada,” BIGG chief executive Mark Binns said in a statement. Basically, consumers will have the option of working with a licensed and publicly audited brokerage, which should give them more confidence in the security of their assets.
Until regulation arrives, Demeter recommends that anyone interested in buying cryptocurrency do their due diligence on the businesses they deal with. “Research the people behind the company,” he says. “See how transparent the company is.”