Coinbase Inc, BitInstant and Coinsetter Receive Subpoenas from The Department of Financial Services

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Coinbase Inc, BitInstant and Coinsetter Receive Subpoenas from The Department of Financial Services
Coinbase Inc, BitInstant and Coinsetter Receive Subpoenas from The Department of Financial Services

Coinbase Inc, BitInstant and Coinsetter Receive Subpoenas from The Department of Financial Services

The Department of Financial Services (DFS), New York’s top banking regulator, has issued subpoenas to several companies such as Coinbase Inc, BitInstant and Coinsetter that deal in Bitcoin. The subpoenas are part of an inquiry into business practices of the virtual currency industry. The subpoenas issued by the statutory body seek information on anti-money laundering programs.

It will also be collecting information on what are measures being taken for consumer rights protection and investment strategies. The Department of Financial Services (DFS) which supervises a number of different types of institutions for their legal compliance such as chartering, licensing, registration requirements, examination, etc. will be inquiring the organizations about the same.

Subpoena an Opportunity for Bitcoin Companies

However, the companies that have been served subpoenas are not feeling unsettled; rather, they are considering it is an opportunity to prove their points. Jaron Lukasiewicz, chief executive of Coinsetter, says that it is an opportunity for companies to open up a much needed dialogue with regulators and show them that they are working to legitimize Bitcoin.

Mr. Lukasiewicz also said that Bitcoin companies are looking for building bridges that help regulators understand and support these financial innovations. The Department of Financial Services (DFS), headed by Benjamin Lawsky also plans to issue a memo expressing concern that Bitcoin companies are not complying with the state’s money transmission laws.

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The Department of Financial Services (DFS) may also issue new guidelines which will be regulating Bitcoin, a virtual currency that has been embraced by a number of venture capitalists in Silicon Valley. The Financial Services Law, the legislation that created the Department of Financial Services, was introduced as part of Governor Andrew M. Cuomo’s 2011 budget aims for fair play in finance and banking.

The Department of Financial Services or DFS is all set to modernize regulation by allowing the agency to oversee a broader array of financial products and services; Bitcoin will be another such a product that will soon be regularized. The body has comprehensive supervisory rights on banks and several kinds of financial and commercial bodies.

If Bitcoin companies are considered banks, the Department of Financial Services will regulate them as it regulates other banks which it considers are community, regional or national for-profit business corporations owned by private investors and governed by a board of directors chosen by stockholders.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com