The New York Attorney General sent a letter to 13 exchanges in a bid to probe their transparency and privacy policies.
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New York State, the financial hub of the United States, has so far been a rather relaxed place to start a project revolving around cryptocurrencies. However, New York Attorney General Eric Schneiderman has been concerned about the way cryptocurrency exchanges operate, which prompted him to launch on Tuesday the Virtual Markets Integrity Initiative (VMII).
The VMII is a simple fact-finding mission that aims to peek into how the platforms crypto traders use operate, with a strong emphasis on learning about their customer protection and transparency policies.
The AG’s office sent letters to 13 such exchanges, each containing a questionnaire that starts out by asking for basic information about the company.
“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms. Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve,” Schneiderman said.
The questionnaire covers some topics in depth, including matters related to internal controls and money laundering.
For example, exchanges are required to “identify all categories of personally identifiable information and proof of identity” that they make customers provide in order to gain access to their platforms.
Exchanges have also been asked to submit copies of their applications for charters or a “BitLicense” that allows them to trade cryptocurrencies.
Among the companies that have received these letters are Gemini Trust, iBit, Coinbase GDAX, and BitFlyer.
About a month ago, New York moved to discourage local crypto miner by introducing higher electricity rates for them and prevent a spike in prices for households and existing commercial enterprises.
However, it does not feel as if the state intends to fight its exchanges. These letters appear to be a simple probe to determine whether operators would need extra regulatory measures to ensure transparency for their users.