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itBit, the startup Bitcoin exchange whose backers include former FDIC chairman Sheila Bair, has become the first digital currency firm to receive a trust charter under New York banking law.
May 7 -
Blockchain technology associated with Bitcoin has caught the eye of bankers, but now comes the hard part: figuring out where it can be used international payments, treasury services or elsewhere without wasting a lot of time and money in experimentation.
September 11 -
The digital currency industry reacted warily to a model framework for regulating such firms released Tuesday by the Conference of State Bank Supervisors, arguing the language is too vague and treats digital assets like normal money.
September 15
WASHINGTON — The New York State Department of Financial Services on Monday gave a third virtual currency company the green light to begin operations in the state.
Gemini Trust Company, a bitcoin exchange operated by Cameron and Tyler Winklevoss, was granted a limited purpose trust charter by the state regulator on Monday.
"In New York, we are continuing to move forward on licensing and chartering virtual currency firms," Anthony J. Albanese, acting superintendent of financial services at the NYDFS, said in a statement. "Smart, targeted regulation that helps protect consumers and prevent illicit activity is vital to the long-term future of this industry."
The move comes after New York approved itBit Trust Co. and Circle Internet Financial for charters as virtual currency companies. ItBit, which operates an exchange like Gemini, also received a trust charter, while Circle, which provides payment services, was the first firm to receive a state BitLicense.
In a blogpost on the Gemini website, Cameron Winklevoss wrote that the charter "makes us a fiduciary, and allows us to accept both individual and institutional customers under New York Banking Law."
Gemini will be able to operate in 26 states and Washington, D.C., he wrote. Because Gemini received a trust charter, it does not need to register with the Financial Crimes Enforcement Network as a money-services business or get a money transmitter license in all the states that it operates — something that no virtual currency company has been able to do.
However, Winklevoss wrote that "Meeting the high-water mark of banking compliance is no small task, especially for a startup, but we felt that doing so was crucial."
"Gemini must look and feel as safe, secure and compliant as any other top tier financial institution in the world," he wrote.
The New York regulator said in a statement that after the meltdown of the Mt. Gox bitcoin exchange that was headquartered in Japan, it realized the need for "stronger oversight" of virtual currency exchanges and began the process of accepting applications under pre-existing New York banking Law. While the trust charter is different than the BitLicense, the NYDFS said exchanges are "expected to meet the full requirements of the NYDFS BitLicense regulatory framework."
