New York Attorney General Eric Schneiderman has launched the “Virtual Markets Integrity Initiative”, in an effort to aggregate and understand the activities of major cryptocurrency trading platforms operating in New York. Schneiderman states: “Through this Initiative, OAG seeks to increase transparency and accountability in the virtual currency marketplace—and better inform the actions of enforcement agencies, investors, and consumers in this space.”
Thirteen major trading platforms, including Coinbase, Inc., Gemini Trust Company, and bitFlyer USA, Inc. have received requests for material information regarding their operations. What is the state seeking? The letters resembles a traditional Due Diligence request, seeking disclosure of:
- Ownership of the platform
- Operational Information
- Policies and Procedures
- Internal Protections (from insider trading activities)
- Privacy and Anti-Money Laundering Policies
- Consumer Fraud Protections
- Any other written materials that govern the platform
The full questionnaire can be viewed here.
Many of the companies listed are embracing the inquiry, and have reported they will be complying with the Attorney General’s request.
The Attorney General’s office is taking a tentatively accepting attitude towards digital trading platforms. Schneiderman himself acknowledges that “the challenge with virtual currency is to prevent fraud…without stifling legitimate market activity or innovation”. We are glad to see New York stepping up as a leader in the regulation of digital assets, allowing innovation to flourish while also engaging in proper due diligence.