FairX, a financial services company involved with banking and digital assets, has shut down its operations as it has failed to establish a licensed national bank.
According to a Twitter thread on July 19th, the company was unable to set up a licensed national bank due to lack of funding. It had been trying to raise funds for the planned bank over the past 14 months. It described the proposed bank as
“… a new, licensed, fully regulated national bank, modeled as a financial market utility, that would work with individuals and banks to create a dematerialized bank deposit, denominated in USD. The bank was Frank Financial.”
“This dematerialized bank deposit would act, in many respects, similar to a stablecoin, except a stablecoin this was not. A stablecoin, by its definition, is not an asset that can settle transactions between banks in the context of, say, ACH [automated clearing house] or CC [credit card] transactions,” the posts further explained.
FairX stresses that it succeeded in introducing its business idea to regulators, complying with Know Your Customer, Anti-Money Laundering and counter-terrorism financing rules, and it has received positive feedback from regulators. After initiating its binary stage, FairX realized that it needed another injection of capital.
At that point, the crypto investment community backed out purportedly due to the bank’s perceived centralisation.