June 14, 2018 / 1:54 PM / in 9 days

Xapo, itBit win U.S. regulator nod for virtual currency services

NEW YORK (Reuters) - The New York Department of Financial Services (DFS) said on Thursday it had granted a virtual currency license to global financial services company Xapo to offer a digital wallet and vault service.

DFS also approved New York-based global cryptocurrency exchange itBit’s application to trade and offer custody services to four additional virtual currencies — Bitcoin Cash, Ethereum, Litecoin, and Stellar Lumens. itBit also offers bitcoin on its exchange.

Xapo, a start-up that offers bitcoin wallets and cold storage vault, was co-founded by Paypal board member Wences Caceres. Its board of advisers is led by former U.S. Treasury Secretary Lawrence Summers and former Citibank chairman and chief executive John Reed.

“Today’s actions represent New York’s continued commitment to creating a thriving, global fintech marketplace,” DFS Superintendent Maria T. Vullo said in a statement, adding that with strong oversight by the DFS, “consumers and the virtual currency market alike will continue to benefit.”

DFS has conducted a comprehensive review of Xapo’s application, including the company’s anti-money laundering, anti-fraud, capitalization, consumer protection, and cybersecurity policies.

The new licensee is subject to ongoing supervision, DFS said.

itBit, meanwhile, was granted a virtual currency charter in May 2015. It has a sister unit called Paxos, a blockchain company.

“This is a milestone for us on a much broader product road map that includes additional assets, additional products,” Chad Cascarilla, chief executive officer of itBit told Reuters in an interview.

itBit will immediately start to offer custody, escrow, and over-the-counter trading services, with trading on the exchange to follow, Cascarilla said.

He said the exchange currently is the second largest in the United States in terms of the U.S. dollar/bitcoin currency pair, with daily volume of roughly $100 million.

With the Xapo approval, DFS has now approved eight firms for virtual currency charters or licenses, while denying applications that did not meet DFS standards. DFS has granted licenses to Genesis Global Trading Inc; bitFlyer USA, Coinbase Inc., XRP II and Circle Internet Financial, and charters to Gemini Trust Company, and itBit.

Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Aparajita Saxena in Bengaluru; Editing by Bernadette Baum

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