ItBit Nets $25 Million, Launches NYDFS-Approved Bitcoin Exchange
The round drew support from a pool of new and existing sources including RRE Ventures, Liberty City Ventures and investor Jay W Jordan II. Raptor Capital Management chairman James Pallotta also participated in the round.
ItBit further confirmed the addition of three new members to its board of directors: former Federal Deposit Insurance Corporation chairperson Sheila Bair; former New Jersey Senator Bill Bradley; and former Financial Accounting Standards Board (FASB) chairman Robert Herz.
The three directors had previously been tied to itBit through its banking license application filed in February, though last month the company declined to confirm their participation.
Perhaps most notably, however, itBit revealed that it has received a trust company charter from the New York State Department of Financial Services (NYDFS). According to separate statements from the NYDFS, itBit is the first company of its kind to receive a trust company charter.
In a statement, itBit co-founder and CEO Charles Cascarilla said that the approval gives the bitcoin exchange broad access to US-based customers, adding:
“Regulatory approval from the NYDFS allows us to serve as a custodian for our clients’ assets and expand our services to US customers – the largest market of bitcoin traders in the world – and allows us to do so with the highest standard of care afforded by any bitcoin company.”
ItBit said that customer funds denominated in US dollars will be held in FDIC-insured accounts, though the company declined to name its banking partner.
Charter review complete
In its own remarks, the NYDFS revealed itBit applied for a charter under the agency’s digital currency business process in February of this year, after which it was subjected to what it characterized as a “rigorous review” of its compliance and cybersecurity standards.
As a result, itBit has emerged as one of the more well-regulated US bitcoin exchanges, a point also emphasized by the agency.
The NYDFS explained:
“As a chartered limited purpose trust company with fiduciary powers under the banking law, itBit can begin operating immediately and is subject to ongoing supervision by the NYDFS.”
Superintendent Benjamin M Lawsky remarked in a statement that bitcoin and similar implementations “could ultimately hold real promise” as financial technologies, but echoed past comments by stating that regulations are needed to protect customers.
The addition of Bair, Bradley and Herz grants itBit added financial and political heft as it looks to grow its market share in the budding US bitcoin market.
Bradley, for example, previously acted as New Jersey Senator from 1979 to 1997 – serving on the Senate Finance Committee – and later ran for president during the 2000 Democratic primaries.
In a statement, Bradley voiced his support for bitcoin, starting: "Bitcoin has the potential to transform the world of finance as we know it today."
Bair served as FDIC chair from 2006 to 2011, a period that included the 2008 financial panic and subsequent economic crisis. She has since served on the board for several companies and organizations, such as Spanish banking giant Banco Santander which she joined in 2014.
Herz, a former partner for PricewaterhouseCooper, was appointed FASB chair in 2002.
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