New York authorities on Wednesday granted a license to Coinbase to trade in two additional virtual currencies, expanding the company's services which already included Bitcoin starting in January. The California company - the fifth licensed to trade in digital currencies in New York - now will be able to offer Ethereum and Litecoin as well as "Shift Card," Coinbase's virtual-currency debit card service, the state's Department of Financial Services said in a statement.
The announcement also spotlighted tensions between the agency and national banking regulators in Washington over who has the authority to oversee the so-called fintech industry dealing in virtual currencies. US Treasury's Office of the Comptroller of the Currency is seeking to create a national charter to impose rules on fintech companies, as it does with traditional banks. But that has drawn the ire of local regulators, and New York's DFS says states are best placed to protect consumers and oversee such operations.
"DFS has proven that the state regulatory system is the best way to supervise and cultivate a thriving Fintech industry, like virtual currency," DFS Superintendent Maria Vullo said in the statement Wednesday. An OCC charter process would govern risk management, capital ratios and liquidity, as well as consumer protection measures. "New York will remain steadfast in pushing back against federal encroachment efforts like the OCC's proposal to impose a one-size-fits-all national bank charter that increases risk and seeks to usurp state sovereignty," Vullo said. DFS granted its first virtual currency license to itBit Trust Company in May 2015. It has granted a total of five licenses and denied five other applications.
Virtual currency has grown rapidly since the 2009 launch of Bitcoin, and there are now about over 100 options with a market capitalization of more than $1 million. But the sector has suffered from highly publicized scandals like the 2014 collapse of the Tokyo-based virtual exchange Mt Gox. One Bitcoin, the most-used virtual currency by far, is worth just over $1,000, while Ethereum is worth $40.51 and Litecoin $3.91, according to one trading site.
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