ItBit, a bitcoin exchange operating in New York and Singapore, has been approved as New York State Trust company and added a number of heavy hitters to its board of directors on the heels of a $25 million round from new and existing investors.
“The trust allows itBit to be a custodian for its client’s funds, which is a much higher duty of care than any other bitcoin company is regulated under right now,” said itBit chief executive and co-founder Charles Cascarilla. “It took us 15 months and a well over a thousand page application. It is extremely in-depth, extremely time-consuming and not easy to do.”
The issue of proper approvals from regulatory agencies is becoming more important on the heels of the news that the Financial Crimes Enforcement Network (an arm of the US Treasury) fined Ripple Labs $700,000 for acting as a money services business without filing the proper paperwork.
Though the fine may be restricted to Ripple, itBit says it’s not taking any chances. “The whole financial system is risk-averse after 2007 and 2008,” said Cascarilla. “It’s not good enough to get a bank to deal with you as a counterparty.”
Currently, itBit is the only US-chartered and supervised bitcoin exchange that’s compliant with both New York and federal law.
The pains that itBit has taken to jump through regulatory hurdles have won it the support of heavy hitters like former Senator Bill Bradley, former FDIC chair Sheila Bair, and former chair of the financial accounting services board, Robert Herz.
Earlier this year, the company closed a Series A round of $25 million from investors including RRE Ventures, Liberty City Ventures, and individual investor Jay W. Jordan II, who invested alongside previous investors Raptor Capital Management chair James Pallotta.
“Bitcoin has the potential to transform the world of finance as we know it today,” said itBit board member Bill Bradley in a statement. “itBit can truly become the backbone of the entire Bitcoin ecosystem and help elevate its importance in finance, commerce and building new economies.”