Leading cryptocurrency exchange Coinbase has announced that it has received Bitlicense from the New York Department of Financial Services (NYDFS) to carry out its operations in the state.
Coinbase made the announcement via its official blog. It said:
“The Bitlicense, which authorizes Coinbase’s continuing virtual currency business operations in the state of New York, is an important validation of our highest priority: to operate the most secure and compliant digital currency exchange in the world. We believe the long-term success of virtual currency and blockchain technologies will require productive partnerships between industry and government, and we will continue to make heavy investments in the security and integrity of our operations as we expand our business in New York and around the world.”
The news comes at a time when the exchange is in the midst of a legal tussle with the Internal Revenue Service (IRS). The IRS is seeking the records of all Coinbase customers in the U.S. over a three year period. Coinbase co-founder Brian Armstrong recently stated that the IRS’s subpoena is overly broad and incorrectly implies that all users of virtual currency are evading taxes.
The final BitLicense rules were published by the regulator in June 2015 after almost two-year inquiry into the suitable regulatory guidelines for virtual currency firms. The rules contain key consumer protection, anti-money laundering compliance, and cyber security rules tailored for digital currency companies.
"Through the creation and promotion of strong state-based regulation, DFS continues New York’s long record of being responsive to technological innovation,” said Financial Services Superintendent Vullo. “New York is committed to fostering and encouraging the long-term growth of new industries throughout the state while enforcing all necessary safeguards to protect our markets and consumers.”
The DFS said that it conducted a comprehensive review of Coinbase’s applications, including the company’s anti-money laundering, capitalization, consumer protection, and cyber security policies. After rigorous review, DFS has approved five firms for virtual currency charters or licenses, while denying those applications that did not meet DFS’s standards. In addition to Coinbase, DFS has granted licenses to XRP II and Circle Internet Financial, and charters to Gemini Trust Company and itBit Trust Company.
“At Coinbase, our first priority is to ensure that we operate the most secure and compliant digital currency exchange in the world. We're thrilled to have obtained the BitLicense and look forward to expanding our business in New York”, Brian Armstrong, Coinbase CEO and Co-founder said.
