May 07, 2015
Contact: Matt Anderson, 212-709-1691
NYDFS GRANTS FIRST CHARTER TO A NEW YORK VIRTUAL CURRENCY COMPANY
Bitcoin Exchange “itBit”– Based in New York City – Receives License Under New York Banking Law
Benjamin M. Lawsky, Superintendent of Financial Services, today announced that the New York State Department of Financial Services (NYDFS) 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.
Superintendent Lawsky said: “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. 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.”
In light of the demonstrated need for stronger oversight of virtual currency exchanges after the Mt. Gox collapse, 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 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. 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 is continuing to review and accept applications and proposals from other virtual currency companies.
Additional Background on the NYDFS BitLicense and Virtual Currency Regulatory Process
In August 2013, NYDFS launched an inquiry into the appropriate regulatory guidelines for virtual currencies. As part of a fact-finding effort informing that inquiry, the Department held public hearings on that issue in January 2014.
In July 2014, NYDFS issued its proposed BitLicense regulatory framework for public comment. That regulatory framework includes consumer protection, anti-money laundering compliance, and cyber security rules tailored for virtual currency firms.
In December 2014, DFS outlined an updated BitLicense framework that incorporated feedback from the first round of public comments. The updated proposal contained a series of changes and clarifications, including the creation of a two-year transitional BitLicense to assist start ups. The additional comment period for the revised BitLicense framework ended in March 2015 and NYDFS expects to put forward its final regulatory framework later this month.