New York Department of Financial Services (NYDFS) has issued subpoenas to several companies associated with bitcoin as part of an inquiry into business practices of the virtual currency industry.
The New York regulator has confirmed that it is pondering new rules for virtual currencies and is running an inquiry into the appropriate regulatory guidelines for bitcoin and other virtual currencies.
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The subpoenas issued by the NYDFS will seek information on antimoney laundering programs, consumer protection measures and investment strategies, among other topics.
Benjamin Lawsky, superintendent of the NYDFS, said in the memo that his department was concerned that virtual currency exchangers were violating current New York regulations for money transmitters, which require posting collateral and periodic examinations.
Lawsky has warned that "serving as a money changer of choice for terrorists, drug smugglers, illegal weapons dealers, money launderers, and human traffickers could expose the virtual currency industry to extraordinarily serious of (sic) criminal penalties."
Lawsky said the NYDFS was also considering new regulations specifically for the emerging currency products.
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By GlobalDataThe memo said new rules could also be introduced specifically aimed at virtual currencies, tailored to their unique characteristics, and designed to stop the area turning into a virtual Wild West.
As part of its inquiry, the NYDFS issued subpoenas to 22 companies associated with virtual currencies including BitInstant, BitPay, Coinsetter, Dwolla, Andreessen Horowitz, Google Ventures, and Winklevoss Capital Management..
Jaron Lukasiewicz, chief executive officer of New York-based Coinsetter, said: "Although it may not be apparent from the outside, the Bitcoin companies are taking regulation and compliance very seriously."
Patrick Murck, general counsel for the Bitcoin Foundation, said: "It would engage with regulators in New York and wherever else was needed and provide legal defense when appropriate."
