New York Tells Cryptocurrency Exchanges to be More Transparent
Originally published on: CCN
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April 17, 2018
Cryptocurrency exchanges need to make transparency a greater priority, the New York Attorney General’s office said on Tuesday.
Writing in a letter addressed to 13 cryptocurrency exchanges, New York Attorney General Eric Schneiderman’s office requests that companies provide information on a range of topics related to the operation of their trading platforms.
“Representing a technological advance, a medium of exchange, and an investment opportunity all at once, virtual currencies are inspiring innovators, entrepreneurs, and investors—and are fueling an increasingly diverse ecosystem of companies and applications,” the AG’s office wrote in the letter. “But virtual currency is also a highly speculative sector, featuring significant volatility, instability, and risk. Moreover, published reports indicate the sector has attracted fraudsters, market manipulators, and thieves.”
According to the AG’s office, the 13 exchanges that received letters are: GDAX, Gemini, bitFlyer USA, Bitfinex, Bitstamp USA, Kraken, Bittrex, Poloniex, Binance, Tidex, Gate.io, itBit Trust Company, and Huobi.Pro.
Enclosed with each letter was a 34-point questionnaire, which exchange operators were instructed to complete in full by May 1. Many of the questions are quite in-depth, probing the exchanges about specific policies and procedures related to trading, information about banking relationships and insurance, and KYC/AML practices. The AG’s office said it plans to publish the information “in a publicly accessible format” for the benefit of consumers.
The push for transparency is a key component of Schneiderman’s new Virtual Market Integrity Initiative, which is intended to protect investors and preserve the integrity of these nascent financial markets.
“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms,” said Schneiderman in a statement.
New York already has one of the most stringent regulatory frameworks for cryptocurrency businesses, who must obtain a “BitLicense” from the state’s Department of Financial Services (NYDFS) before they can operate in the state. The introduction of this licensing process in 2014 led to what the New York Business Journal described as the “Great Bitcoin Exodus,” and only a small number of companies have managed to obtain a BitLicense in the years since.
Cameron and Tyler Winklevoss, who co-founded New York-based cryptocurrency exchange Gemini, also recently proposed creating a national self-regulatory body to govern and establish best practices for the nascent industry, which is currently regulated primarily at the state level.
Featured image from Shutterstock.