On May 6, 2015, the Superintendent of the New York State Department of Financial Services (DFS) authorized itBit Trust Company LLC (“itBit”) to engage in the business of a limited purpose trust company and to act as a virtual currency exchange.
ItBit is not your typical money services business, which is usually a nonbanking organization that is issued a license to engage in a nonbanking activity. ItBit actually is a limited purpose trust company, a form of banking organization, but one which still needed approval to engage in virtual currency business. It is also the first trust company to be created in New York since the financial crisis. The organizers of the limited purpose trust company include prominent public servants such as former Financial Accounting Standards Board Chair Robert Herz, former Chair of the Federal Deposit Insurance Corporation chair Sheila Bair and former New Jersey Senator Bill Bradley.
An affiliate of itBit currently operates a bitcoin exchange in Singapore.
While revised proposed “bitlicense” regulations still are pending finalization by the DFS after a review of a second round of comments, the DFS in March had issued an order authorizing applications to be submitted to the DFS for approval to engage in specified virtual currency activities. itBit will be required to abide by both the laws and regulations applicable to limited purpose trust companies as well as the final version of the bitlicense regulations. As a trust company, itBit could be a custodian of customer funds (virtual currency as digital asset). It will not be able to offer regular banking services, such as checking or savings accounts.
See our prior posts on New York State’s virtual currency activity regulatory process here.