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There's been another major step toward mainstream adoption for the digital currency Bitcoin.
The New York State Department of Financial Services (NYDFS) granted a trust company charter to New York-based itBit last Thursday.
Operating under the oversight of the NYDFS will provide the kind of protection and security U.S. consumers expect. For example, itBit will be subject to state audits. And like a bank, itBit also will be required to maintain a certain amount of capital.
And just to make sure all its bases are covered, itBit has arranged to provide FDIC insurance on the fiat balances of customer accounts.
"So far, Bitcoin hasn't approached regulation in a constructive way to allow mainstream use," itBit CEO Charles Cascarilla told the Los Angeles Times. "We made the commitment not to take customers until we could do it on a really holistic and nationwide basis."
The emphasis on safety and security is intended to build confidence in the itBit Bitcoin exchange. Still-fresh memories of the dramatic failure of the Japan-based Mt. Gox exchange last year, in which 850,000 bitcoins worth (at the time) about $480 million were lost, mean new Bitcoin exchanges must go that extra mile.
The itBit charter is not a BitLicense, which the NYDFS has not yet finalized. Instead, it falls under a New York state banking law that regulates trusts.
The charter approval is quite an achievement for the three-year old itBit. The company also announced Thursday it had secured $25 million in Series A venture capital funding.
ItBit Not the First U.S. Bitcoin Exchange
The itBit exchange is actually the second U.S. Bitcoin exchange to go live.
Coinbase launched its exchange in January, but is not available in all 50 states. Coinbase took a different regulatory route, applying for money transmitter licenses in each state. Availability of the Coinbase Bitcoin exchange has grown from 24 states at launch to 27 states and Puerto Rico today.
A third U.S. Bitcoin exchange, Gemini, is also expected to launch this year. Gemini is a project of Tyler and Cameron Winklevoss, who are also awaiting SEC approval of their Bitcoin ETF, the Winklevoss Bitcoin Trust.
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.