Today, New York’s Department of Financial Services granted a license to Bitcoin exchange itBit, giving the company the ability to operate broadly in the U.S.
In addition to receiving a charter from the NYDFS, itBit is also announcing a $25 million round of funding, according to the New York Times.
The banking trust charter will give itBit the ability to operate similarly to a bank. However, it may not clear up the confusion surrounding other Bitcoin business, which for the moment operate without guidelines.
“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,” said NYDFS superintendent Ben Lawsky in a prepared statement.
This is the first legally authorized Bitcoin exchange for the U.S. Over the past year, Bitcoin businesses and regulators in New York have been working together to develop a regulatory framework for virtual currency businesses; however, official rules have yet to materialize.
In July of last year, the department drafted up some potential Bitcoin regulations and introduced the concept of Bitlicenses for virtual currency businesses that comply with its mandatory rules. The department was taking comments on the proposal until January.
The license awarded to itBit is not a Bitlicense, but rather a license that is traditionally given to banks, and it comes with very strict guidelines. NYDFS is expected to unveil a set of guidelines for Bitcoin businesses soon, which will potentially clear up much of the legal ambiguity that virtual currency businesses have been forced to operate under in the past.
As an example, just last week, the Federal Department of Treasury slapped virtual currency network Ripple with a $700,000 fine for failing to register its money business and for not instituting anti-money laundering protocols.