The New York Department of financial services has awarded cryptocurrency exchange Coinbase its license to legally do business in the state.
Though Coinbase has been allowed to do business in the state under a safe-harbor provision while the lengthy application process was being conducted, the formal award of the so-called “BitLicense” solidifies the exchange’s status.
Coming at a time when the exchange has been waging what could be an expensive legal battle with the IRS to protect its customers’ data, the license is being described as a “validation” of Coinbase’s aim to be compliant with regulatory considerations.
A representative of Coinbase told CoinDesk:
“We believe the long-term success of virtual currency and blockchain technologies will require productive partnerships between industry and government, and we will continue to make heavy investments in the security and integrity of our operations as we expand our business in New York and around the world.”
San Franscico-based Coinbase is one of the most heavily funded startups in the industry, having raised $117m in venture capital. In July, the cryptocurrency exchange began accepting the ether digital currency on the ethereum blockchain.
The Bitlicense were formally released in June 2015 to provide a framework for companies looking to custody bitcoin and other cryptocurrencies for their customers or trade the cryptocurrency.
In September 2015 Boston-based Circle was granted the first Bilicense. But by December 2016 the company had pivoted away from its bitcoin exchange to focus more on the cryptocurrency’s rails as a means to conduct faster transacations using fiat currency.
Last July, San Francisco-based Ripple was awarded the second BitLicense as part of its plans to use the blockchain that supports its XRP cryptocurrency to simplify the way banks send money to each other.
The news that Coinbase will now legally be able to continue doing business in the State of New York comes as cryptocurrency exchange is engaging in a legal dispute with the US tax agency Internal Revenue Service.
Following an IRS summons filed in November that requests data on all Coinbase users during a three-year period, Coinbase has joined in a fight its CEO said could cost as much as $1m in an article published this weekend.