BITCOIN

New York begins inspecting bitcoin start-ups

TAGs: Bitcoin, New York

Financial regulators in New York have started going over the operations of digital currency companies in the state.

The inspections are part of the New York State Department of Financial Services (NYDFS) digital currency licensing regime. If you recall, New York started requiring virtual currency companies New York begins inspecting bitcoin start-upsin the state in June 2015—shortly after the collapse of Japan-based Mt. Gox—to apply for a BitLicense before offering services related to digital currency, including holding customer funds and exchanging virtual money for dollars and other regular currencies.

In its recent annual report, the NYDFS stressed the importance of continuous oversight in the industry to keep up with the “speed of transactions” enabled by the blockchain technology. As such, the finance department revealed that it has begun inspecting the operations of digital currency start-ups, which “are subject to periodic examinations by DFS.”

“These technologies create risks to the extent that existing regulatory requirements are bypassed, or regulatory requirements do not keep up with the speed of transactions,” the NYDFS said, noting that “Easier facilitation of payments and anonymous movements of funds can be dangerous without the compliance and oversight designed to safeguard consumers, and to prevent money laundering and funding illegal activities.”

Digital currency start-ups are required by law to subject themselves to inspections, in which the financial regulator will check the company’s “books, records, accounts, documents” and other items, at least once every two years.

Currently, there are five virtual currency companies that have received their BitLicense from the NYDFS. Circle Internet Financial was the first company to secure a license in 2015, followed by Coinbase, Ripple and two other digital currency companies. Meanwhile, Gemini and itBit received trust charters, which means that they are regulated like traditional banks. The regulator also authorized Gemini Trust Company to offer Ether trading on its digital currency exchange based in New York.

Current bitcoin price

Bitcoin traded at a higher $2,704.90 per coin on Wednesday afternoon.

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