itBit has become America’s first national regulatory-compliant BitCoin exchange. On Thursday, the exchange received approval from New York State regulators to form a trust. It can now accept customers from anywhere in the U.S.
Charles “Chad” Cascarilla, CEO of itBit, tells Yahoo Finance’s Aaron Task in the video above that the approval is a big deal because he believes customers can now feel more comfortable with the virtual currency. “We’re regulated. We hold regulatory capital,” he says. “We have regulatory exams and we have someone who is doing oversight of the exchange and can make customers feel as if there is someone else who is looking over what we are doing and making sure customers are in good shape,” he explains.
itBit was originally headquartered in Singapore but moved its main operations to New York last year. “We have spent a lot of time here in the last three years, building our exchange, really making sure that we could test everything that we are doing.” itBit has been operating outside the United States for the last 16 months.
On the move to the U.S. and New York state approval, Cascarilla says, “The approach we have taken is, ‘Let’s ask for permission. Let’s not ask for forgiveness.’”
The approval as a trust supersedes the exchange as solely a form of money transmission as has been the case with other Bitcoin exchanges because, Cascarilla says, it's now “organized under New York banking law. This is a very sophisticated way of being regulated… It’s a totally different licensing and regulatory regime.”
Bitcoin has had a rough go lately. The virtual currency fell more than 60% in 2014, and saw the bankruptcy of one of its biggest exchanges, Mt. Gox, after its computer system was hacked. 2015 didn't start much better in terms of price, which at one point was more than 80% below its 2013 high. “Mt. Gox was totally unregulated. They were operating as best they could at the time,” says Cascarilla. “And again bitcoin is still in its early stages. And inevitably, in its early stages, you have some pitfalls and hiccups,” he says.
But now interest in the virtual currency may be gaining momentum. Last month, Goldman Sachs (GS) and Chinese investment firm, IDG Capital Partners, invested $50 million in Circle Internet Financial, a start-up that uses Bitcoin technology to allow customers to digitally store and transfer money. Earlier this year, the New York Stock Exchange invested in Coinbase, a Bitcoin trading platform. And in January, the Winklevoss twins launched another exchange called Gemini.
Cascarilla hopes itBit will lead the way because its new regulatory status will allow more sophisticated customers to use the exchange. itBit has hired a chief compliance officer from eBay (EBAY). And it boasts board members like former FDIC Chair Sheila Bair, former U.S. Senator Bill Bradley and former Financial Accounting Standards Board Director Robert Herz.
As for funding, Cascarilla says itBit recently raised $25 million in capital, for a total of $32 million to date. “We have more capital than any other exchange in the Bitcoin world and that’s an important item for soundness and safety as well,” he says.
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