On March 22, 2017, the New York State Department of Financial Services (DFS) approved Coinbase’s application to offer the trading of Ether and Litecoin (a modification of the Bitcoin protocol) to New York customers. Although not the first entity to trade in Ether in the state, it is the first to offer Litecoin. The DFS also approved the use of Coinbase’s Visa Shift Card, a debit card that allows Coinbase users to spend bitcoin and Ether anywhere Visa is accepted, in the state of New York.
As previously reported by ETHNews, Coinbase was issued the third BitLicense by the DFS in January 2017, joining a short list of approved BitLicense holders in New York, including the first, Boston-based bitcoin startup, Circle Internet Financial, Inc., and the second, distributed ledger startup, Ripple Labs, Inc..
The Winklevoss Twins’ over-the-counter Gemini Exchange was the first New York company authorized by the DFS to trade Ether, in May 2016. Coinbase, however, is the first BitLicense holder to be approved to trade Ether within the Big Apple.
Financial Services Superintendent Maria T. Vullo made the announcement, saying:
“DFS has proven that the state regulatory system is the best way to supervise and cultivate a thriving fintech industry, like virtual currency. New York will remain steadfast in pushing back against federal encroachment efforts like the [Office of the Controller of the Currency’s] proposal to impose a one-size-fits-all national bank charter that increases risk and seeks to usurp state sovereignty.”
The regulations imposed by the DFS are limited to activities involving the state of New York or New York residents and have been the subject of controversy. In 2015, several bitcoin companies announced they were stopping all business in the state leading to what the New York Business Journal called the “Great Bitcoin Exodus.”
According to the statement, the DFS has approved virtual currency charters or licenses to only five firms so far: Coinbase, XRP II (an affiliate of Ripple), Circle, Gemini Trust Company, and itBit Trust Company, LLC. Companies that have been denied and ordered to stop any New York operations are Disruptor Labs, LLC, ChangeCoin Inc., Ovo Cosmico Inc., Snapcard Inc., and OKLink PTE. LTD.
Brian Armstrong, Coinbase CEO and co-founder, communicated his sentiments and the importance of the DFS approval:
”At Coinbase, our first priority is to ensure that we operate the most secure and compliant digital currency exchange in the world. New York is an important market and we look forward to expanding our services for New York customers as swiftly as possible.”