Banking and Finance Law Daily New York authorizes blockchain settlement service, grants seventh virtual currency license
Friday, May 18, 2018

New York authorizes blockchain settlement service, grants seventh virtual currency license

By Charles A. Menke, J.D.

The New York Department of Financial Services (DFS) has authorized Paxos Trust Company LLC, formerly known as itBit Trust Company, to offer a permissioned, blockchain-based post-trade platform settlement service called Bankchain, the agency announced. In addition, the DFS granted a virtual currency license to Genesis Global Trading, Inc. Maria T. Vullo, the DFS Superintendent, said that "[t]hese approvals demonstrate DFS’s commitment to protecting consumers and the virtual currency market while encouraging innovation, such as the expanded use of blockchain, and providing strong regulatory oversight to new and existing market participants."

Paxos, a subsidiary of Kabompo Holdings Ltd., offers the Bankchain Precious Metals post-trade platform settlement service, which facilitates settlement among buyers in the "Loco London" market of gold bullion physically held in vaults recognized by the London Bullion Market Association. As itBit, Paxos was the first virtual currency company to receive a charter from the DFS (see Banking and Finance Law Daily, May 7, 2015). "We are focused on building the best infrastructure to enable a modern day settlement solution for the precious metals market that will unlock capital, mobilize assets and create value," Paxo CEO Charles Cascarilla said.

The Genesis license marks the seventh virtual currency charter or license issued by the DFS. The DFS noted that it conducted a comprehensive review of the Genesis application, including the company’s anti-money laundering, anti-fraud, capitalization, consumer protection, and cyber security policies. Genesis, which is subject to ongoing supervision by the DFS, conducts over-the-counter virtual currency block trading of Bitcoin, Ether, Ether Classic, Litecoin, Ripple, and Bitcoin Cash with counterparties on a proprietary basis. The license also authorizes Genesis to undertake potential future offerings of Zcash. Genesis CEO Michael Moro said that the DFS’s decision to issue the license "is an important step forward and reaffirms the robust compliance measures we have enacted as a trusted trading partner."

Companies: Genesis Global Trading, Inc; Kabompo Holdings Ltd.; Paxos Trust Company LLC, formerly known as itBit Trust Company

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