New York State Department of Financial Services (NYDFS) announced Thursday that it has granted a charter under the New York Banking Law to itBit Trust Company, LLC – a commercial Bitcoin exchange.
ItBit, which is based in New York City, is the first virtual currency company to receive a charter from NYDFS.
“We have sought to move quickly but carefully to put in place rules of the road to protect consumers and provide greater regulatory certainty for virtual currency entrepreneurs,” New York Superintendent of Financial Services Benjamin M. Lawsky said.
“The technology behind Bitcoin and other virtual currencies could ultimately hold real promise and it is critical that we set up appropriate rules of the road to help safeguard customer funds. Indeed, we believe that regulation will ultimately be important to the long-term health and development of the virtual currency industry,” said Lawsky.
NYDFS stated that in light of the demonstrated need for stronger oversight of virtual currency exchanges after the collapse of Mt. Gox, a Bitcoin exchange in Japan, NYDFS issued a March 2014 public order initiating a process for accepting licensing applications for virtual currency exchanges under the New York Banking Law.
As previously noted in the NYDFS announcement of that order, those exchanges will ultimately be expected to meet the full requirements of the BitLicense regulatory framework as a condition of licensure. NYDFS said it expects to issue its final BitLicense regulations later this month.
ItBit applied to NYDFS for a charter under that process for virtual currency exchanges in February 2015. NYDFS conducted a rigorous review of that application, including, but not limited to, the company’s anti-money laundering, capitalization, consumer protection, and cyber security standards, the announcement said.
As a chartered limited purpose trust company with fiduciary powers under the Banking Law, itBit can begin operating immediately and is subject to ongoing supervision by the NYDFS. ItBit will also be required to meet the obligations for operating a trust company under New York law, as well as those under the final BitLicense regulations.
NYDFS said it is continuing to review and accept applications and proposals from other virtual currency companies.
- Bitcoins: The Next Cyberinsurance Risk?
- New York Regulator Lawsky Proposes ‘BitLicense’ Regulatory Framework
- Great American Launches Bitcoin Coverage for Commercial, Governmental Entities
- New York DFS Superintendent Lawsky Reveals Bitcoin Regulation Plans
Was this article valuable?
Here are more articles you may enjoy.