You are using an older browser version. Please use a supported version for the best MSN experience.

New York banking regulator grants first charter to bitcoin company

Reuters logoReuters 5/7/2015 Karen Freifeld
UP NEXT
UP NEXT

ItBit Trust Company, LLC, a bitcoin exchange, has been granted a charter under New York State's banking law, becoming the first virtual currency company to receive a charter in the state, according to New York's Department of Financial Services.

The exchange can begin operating immediately, but will be required to meet the obligations for a trust company under New York law, as well as upcoming "BitLicense" regulations, the state agency said.

New York's Department of Financial Services is expected to issue regulations for bitcoin and other virtual currency businesses later this month.

In a statement, itBit said would immediately begin accepting U.S. customers.

The company also said it has partnered with an FDIC-insured and regulated bank to assure U.S. clients that their money is held in the United States and with FDIC-insurance, which covers $250,000 per account.

ItBit said it had raised $25 million in financing.

The Department of Financial Services issued a March 2014 order initiating a process for accepting licensing applications for virtual currency exchanges under the New York banking law.

The order came after the failure of Mt. Gox, a Tokyo-based exchange that filed for bankruptcy in Japan and the United States after losing an estimated 850,000 in customer bitcoins, or about $560 million.

The regulator said itBit applied for its charter in February 2015, and after a review of its anti-money laundering, capitalization, consumer protection and cyber security standards, the charter was granted.

The regulator plans to issue "Bitlicense" regulations later this month.

"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," DFS Superintendent Benjamin Lawsky said in a statement.

Reuters reported last month that itBit, whose exchange operates in Singapore, had filed for the banking license after moving its primary headquarters to New York last year.

The company is a global exchange that offers institutional and retail investors a platform to buy and sell bitcoin. Its board of directors includes former New Jersey Senator Bill Bradley, former FDIC Chair Sheila Bair and former Financial Accounting Standards Board Director Robert Herz.

(Reporting by Karen Freifeld; Editing by Dan Grebler)

AdChoices
AdChoices
image beaconimage beaconimage beacon