The New York Department of Financial Services (DFS) has issued subpoenas to a number of bitcoin companies requesting information about the way in which they operate and the consumer safeguards they have in place.
A memo issued by the DFS, written by department head Benjamin Lawsky, suggests it wants to work with bitcoin companies to ensure the virtual currency industry can continue to exist as a “legitimate business enterprise”.
“It is in the common interest of both the public and the virtual currency industry to bring virtual currencies out of the darkness and into the light of day through enhanced transparency. It is vital to put in place appropriate safeguards for consumers and law abiding citizens,” the memo states.
The Wall Street Journal claims that around 24 bitcoin companies have been issued with subpoenas, including BitInstant, Coinsetter and Coinbase.
Coinsetter wouldn’t confirm whether or not this is true, but the company’s founder Jaron Lukasiewicz said he believes the move has created the opportunity for bitcoin companies to work with regulators to create an environment in which virtual currency can thrive.
“The companies you most often hear about in the bitcoin space take regulation very seriously and are working hard to do things the right way. I view this new dialogue as an opportunity to do that,” he explained.
Patrick Murck, General Counsel at the Bitcoin Foundation, feels less positive about the subpoenas: “The requests are onerous and set a poor tone for New York as a home for innovation. The foundation will support its members and the bitcoin community as needed. This includes engagement with regulators and, where appropriate, legal defense.”
Marco Santori, Chairman of the Bitcoin Foundation’s Regulatory Affairs Committee, believes that the DFS’ approach was influenced by the industry’s reaction to the California Department of Financial Institution’s (DFI) cease and desist letter to the foundation.
“The DFS coupled their subpoenas with a public notice stating explicitly the purpose of their requests: to involve the industry in developing ‘appropriate regulatory guidelines’ for the digital currency industry,” he explained.
In July, the foundation issued a formal response to the DFI’s cease and desist letter, clarifying why it is not under the jurisdiction of the DFI. It also detailed why, under Californian law, bitcoin isn’t classed as a payment instrument. The foundation is still awaiting a response from the DFI.
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