Saturday, May 09, 2015

Bitcoin Exchange Granted New York Banking Charter

By Amanda Maine, J.D.

The New York State Department of Financial Services (NYDFS) has granted a charter to a commercial Bitcoin exchange. NYDFS announced that, in granting charter under New York banking law to New York City-based itBit Trust Company, LLC, the company is the first virtual currency company to receive such a charter.

NYDFS had announced last year that it would be accepting licensing applications for virtual currency exchanges under New York banking law. NYDFS’s order initiating the application process advised that virtual currency exchanges would ultimately be expected to meet the full requirements of the BitLicense regulatory framework as a condition of licensure.

BitLicense. Following an inquiry and fact-finding efforts about regulatory guidelines for virtual currencies, including public hearings, NYDFS issued a proposed BitLicense regulatory framework in July 2014. NYDFS updated its proposed BitLicense framework in December 2014. The new proposal incorporated feedback from the first round of public comments and contained a series of changes and clarifications. The final BitLicense framework should be put forward later this month, according to NYDFS.

itBit. itBit submitted its application in February 2015. As part of a rigorous review of its application, NYDFS evaluated itBit’s anti-money laundering, capitalization, consumer protection, and cybersecurity standards. itBit will be able to start operating immediately as a chartered limited purpose trust company. It will be subject to ongoing supervision by NYDFS and must meet obligations for New York trust companies. It is also subject to the final BitLicense regulations.