What does it mean for a cryptocurrency exchange to obtain a trust license?

Firstly, what is a trust?

Here we focus on overseas trusts because overseas trusts and domestic trusts are two completely different concepts.

Domestic Trust
It refers more to a product or a way of investment and financial management.

Foreign Trust
A legally binding behavior based on credit, in which there is a transformational relationship between the principal , the trustee and the beneficiary .

A trust in the true sense directly divests the ownership of assets and has the trustee manage and distribute them. The ownership of the assets is truly unrelated to the settlor. The trust is an independent, indivisible property, thus isolating the assets from debts and taxes, avoiding the intervention of beneficiaries or family disputes over inheritance, and protecting the complete inheritance of assets.

In other words, the assets placed in the trust structure are protected by U.S. law, so they are not affected by any other factors and have supreme authority. Courts, individuals, and organizations in any country in the world have no right to interfere.

What's the meaning?

When you put your assets into a trust structure, only you have the right to decide who can spend them, how long they are spent, and how they are spent , and they are completely independent of you.

As you can imagine, applying for a US trust license requires a very complex and rigorous application process, and you need to apply in accordance with the corresponding information requirements and financial standards.

For example, U.S. regulators will conduct background checks on each core member, including true academic qualifications, criminal record, and whether there are any adverse lawsuits, etc., to prevent membership from affecting the company's operations; secondly, the company needs to have an independent board of directors and comply with local banking laws.

In addition, these application requirements also include several specific indicators such as competitiveness, capital funds, qualifications including market analysis, assets and liabilities, income and expenditure estimates, etc.

Therefore, it is self-evident that cryptocurrency exchanges obtaining trust licenses is of great significance to the cryptocurrency industry and the entire digital economy industry.

In the transaction of crypto assets, the exchange assumes the responsibilities of both brokerage firms managing transactions and banks managing funds. As a third party outside the two parties of the transaction, when the exchange receives payment from the buyer, it also pays the crypto assets to the buyer. In this process, the exchange assumes the role of custody.

With the support of a compliant trust license, the security of user assets is greatly guaranteed.

At the same time, this means that in addition to Coinbase, domestic cryptocurrency exchanges can also provide users with a formal and compliant capital entry, making it easier for family offices and large funds around the world to start holding digital assets as an asset allocation.

Against the backdrop of the accelerated development of blockchain technology, the continuous expansion of the scale of digital assets, and the rising custody needs of institutional investors, solving compliance and user asset security issues is increasingly becoming an important foundation for the continued development of crypto assets.

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