Bitcoin Exchange Receives First License in New York State

#1

Post by verkter » Thu, May 07, 2015, 3:47 PM UTC

Bitcoin Exchange Receives First License in New York State
nytimes.com

Re: Bitcoin Exchange Receives First License in New York State

#2

Post by thinkcomp » Thu, May 07, 2015, 3:52 PM UTC

There's an error in the first paragraph of this article. A New York license allows one to operate legally in New York only, not the entire country.

Re: Bitcoin Exchange Receives First License in New York State

#3

Post by vessenes » Thu, May 07, 2015, 4:50 PM UTC

This is huge for the itBit team; they've been cranking away on this quietly for a couple of years at least; it's been expensive and time consuming. Congrats.

Re: Bitcoin Exchange Receives First License in New York State

#4

Post by nkassis » Thu, May 07, 2015, 4:56 PM UTC

thinkcomp wrote: post #2

There's an error in the first paragraph of this article. A New York license allows one to operate legally in New York only, not the entire country.

Does it matter where the person using the exchange is? or only that the exchange be physically located in NY?

Re: Bitcoin Exchange Receives First License in New York State

#5

Post by thinkcomp » Thu, May 07, 2015, 5:03 PM UTC

nkassis wrote: post #4

thinkcomp wrote: post #2

There's an error in the first paragraph of this article. A New York license allows one to operate legally in New York only, not the entire country.

Does it matter where the person using the exchange is? or only that the exchange be physically located in NY?

It depends on the state statute. Generally I've been told that it matters where the customer is.

Re: Bitcoin Exchange Receives First License in New York State

#6

Post by iancarroll » Thu, May 07, 2015, 5:33 PM UTC

thinkcomp wrote: post #2

There's an error in the first paragraph of this article. A New York license allows one to operate legally in New York only, not the entire country.

It looks like this is a banking charter and not a money transmitter license (?)

Re: Bitcoin Exchange Receives First License in New York State

#7

Post by thinkcomp » Thu, May 07, 2015, 5:37 PM UTC

iancarroll wrote: post #6

thinkcomp wrote: post #2

There's an error in the first paragraph of this article. A New York license allows one to operate legally in New York only, not the entire country.

It looks like this is a banking charter and not a money transmitter license (?)

I thought that was possible but it's inconsistent with everything else I know. I think it's the reporter's misunderstanding of what a money transmission license is, though I'm happy to be corrected if anyone can find proof that a BitLicense suddenly shifted from being a modified MTL to a bank charter after the comment period... It seems like the FDIC would have a lot to say about that; also it would be totally insane to start handing out state bank charters to virtual currency operators when typical money transmitters don't qualify due to their [much lower] risk profile.

Re: Bitcoin Exchange Receives First License in New York State

#8

Post by PierreRochard » Thu, May 07, 2015, 5:41 PM UTC

thinkcomp wrote: post #7

iancarroll wrote: post #6

Earlier quoted context omitted.

It looks like this is a banking charter and not a money transmitter license (?)

I thought that was possible but it's inconsistent with everything else I know. I think it's the reporter's misunderstanding of what a money transmission license is, though I'm happy to be corrected if anyone can find proof that a BitLicense suddenly shifted from being a modified MTL to a bank charter after the comment period... It seems like the FDIC would have a lot to say about that; also it would be totally insane…

See here: http://www.dfs.ny.gov/about/press2015/pr1505071.htm

Re: Bitcoin Exchange Receives First License in New York State

#9

Post by Animats » Thu, May 07, 2015, 5:44 PM UTC

Read their terms. They're explicitly front-running. Price data on the public site is delayed (they don't say by how much), but "market makers" can buy faster access.

Their FDIC insurance as a trust company covers only US dollars, not Bitcoins. Bitcoins are uninsured.

If you have a disagreement with the exchange part of the company, you have to go to binding arbitration in Singapore.

Re: Bitcoin Exchange Receives First License in New York State

#10

Post by bbanyc » Thu, May 07, 2015, 5:51 PM UTC

iancarroll wrote: post #6

thinkcomp wrote: post #2

There's an error in the first paragraph of this article. A New York license allows one to operate legally in New York only, not the entire country.

It looks like this is a banking charter and not a money transmitter license (?)

It's a limited-purpose trust company - it can only accept assets as trustee and cannot hold cash as a customer deposit. Because depositors' funds aren't at risk, these entities don't have to join the FDIC and are exempt from some other regulations.

I guess because itBit acts as a custodian for Bitcoins and not just a transmitter, the DFS thought it was a closer fit than a money transmitter license.