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26 sats \ 13 replies \ @PROTOPHREAK 26 Jan 2023 \ on: Prime Trust to cease all business in Texas effective 31 Jan 2023 bitcoin
Any more details? Prime trust has also stopped supporting other states recently. I would love to learn what is happening at a state level to cause this.
Unlike other states, Texas is a BIG DEAL. No KYC ops or market making ops for that state is a death sentence for some businesses.
Many exchanges are entirely reliant on Prime Trust to operate at all and Texas is one of the biggest markets across the board for this stuff.
Even companies like Swan and Strike rely on Prime Trust for a lot of different things. I love both and really hope to see them navigate through this.
This is much more devastating than people realize. I would anticipate fallout or major changes in the way theses businesses operate in a very abrupt manner.
I've gotten some emails from exchanges I forgot existed years ago that they were cutting off Texas last week. I wonder if they were using Prime Trust.
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Most likely yes. Prime Trust is a single point of failure across the board, they are huge. They provide liquidity, custody, KYC and anti-fraud services so they are a whole workshop of tooling for Bitcoin or Crypto based startups.
I also suspect another reason Prime Trust is used is because they handle a good amount of licensing and legal issues state to state, which leads us to our current problem. Unless these exchanges have a money transmitter license or can switch out to a different provider (lmao) they have to shut down in the same regions as Prime Trust because they relied on Prime Trust's licensing to operate in that region in the first place.
So many companies are totally fucked.
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i believe strike does not use prime trust
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Strike uses Bitcoin technology to offer instant payments globally, with no added transaction fees. Use Strike to pay your friends, buy goods and services online, make micropayments, tip content creators, as well as buy and sell bitcoin.
To offer these services, we’ve partnered with Prime Trust, LLC, a state-regulated trust company, which holds your funds in custody and enables funds transfers. You can contact Prime Trust here.
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they definitely do
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Liquidity provider != custody provider
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lmao, it's hilarious how people think they stopped using Prime Trust due to their verbiage around the massive fuck-up (which btw, they could have easily built internal tooling to prevent... and presumably still have not, so you are being extremely trustful that you are not getting screwed with them or Swan). Prime Trust got another liquidity provider, which then Strike effectively had access to. Your entire backend liquidity provider is not something you can change in a weekend, lol
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why has strike not made an announcement about not being able to buy bitcoin in texas if they still use prime?
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My guess is that will accelerate a spin down of what I suspect to be a large portion of their business. Prime Trust will work to offboard accounts so there is likely some sort of grace period. I would expect every second of that grace period to be milked by any company who is reliant on Texas to boost their customer base.
In any case they still have a few days to announce. May not need to give any advanced notice at all. Maybe they have some sort of ace in their pocket to keep operating in Texas. That is always possible. I am hopeful for that anyways.
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strike has its own money transmitter license in texas.
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Ok an update to my previous response. I looked into this a bit more and it is true that they have an MTL for Texas: https://strike.me/legal/licenses/
But it also lists they have an MTL for South Dakota, which they no longer operate in because Prime Trust is not currently operating in that state.
Could go so many directions so I guess we will have to wait and see.
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That is good to know. I did not think to check but they probably list their licenses some where on their website. I am going to check Swan too but they probably have a license as well.
I can't imagine either are very happy with Prime Trust right now. Maybe they know the "why" behind it all though. Prime Trust does not explain it to sufficient understanding beyond "We pulled our license, will reapply ASAP".
Prime Trust honestly kind of sounds like a bit of a shit show of a company from what I am gathering.
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