ItBit raised $25 million in seed funding and won approval from New York's Department of Financial Services to operate as an exchange, becoming the first virtual currency company to earn a charter for
ItBit raised $25 million in seed funding and won approval from New York's Department of Financial Services to operate as an exchange, becoming the first virtual currency company to earn a charter for exchange operations in New York.
Benjamin Lawsky, the NYDFS superintendent, said it marked an important step for Bitcoin and other digital currencies. "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."
The company appointed Sheila Bair, former FDIC chairman, and Bill Bradley, a former U.S. Senator from New Jersey, to its board of directors.
The Financial Crimes Enforcement Network signaled a harder line on the virtual currency industry. Days after assessing a $700,000 fine against Ripple Labs, FinCEN director Jennifer Calvery spoke at the 2015 West-Coast Anti-Money Laundering Forum and sketched out the agency's enforcement direction. Virtual currency companies operate as money transmitters, Calvery told the audience, and must follow the rules that apply to transmitters elsewhere in finance.
"Working closely with our delegated BSA examiners at the Internal Revenue Service, FinCEN recently launched a series of supervisory examinations of businesses in the virtual currency industry," Calvery said. "As with our BSA supervision of other parts of the financial services industry, these exams will help FinCEN determine whether virtual currency exchangers and administrators are meeting their compliance obligations under the applicable rules. Where we identify problems, we will use our supervisory and enforcement authorities to appropriately penalize non-compliance and drive compliance improvements."
Companies in the space should expect contact from federal examiners.
The Isle of Man announced plans to create a blockchain-based registry of virtual currency operators. The island's Department of Economic Development will use a Proof-of-Stake protocol derived from Credits to maintain a ledger of virtual currency companies. The network nodes remain centralized within the department, though users can download the client software to participate. The government experiment signals potential for blockchain technology to handle record-keeping functions in the future.
