New York maintained a strict stance towards the cryptocurrencies when it comes to the cryptocurrency exchange. Now, the Attorney General of New York, Eric Schneiderman, announced an investigation of a group of cryptocurrency exchanges in order to get to know their processes for the prevention of risks and financial crimes.
The investigation is part of the Virtual Markets Integrity Initiative. The goal of this initiative is to protect the interests of the clients and increase the transparency and responsibility of the cryptocurrency exchanges operating with digital assets.
According to the document published by the Attorney General, due to the increasing number of multi million thefts, market manipulation and other inconveniences related to the cryptocurrency world, it was necessary to take actions to protect the investors. Eric Schneiderman said the following: “With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money. Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms. Our Virtual Markets Integrity Initiative sets out to change that, promoting the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”
The Attorney General’s office sent a questionnaire to 13 cryptocurrency exchanges, among which are some of the most important companies in the sector with high trading volumes, such as Binance, Bittrex, Huobi, Bitfinex and others.
The questions were related to their exchange policies, privacy, measure to prevent money laundering, etc. Nevertheless, Matt Odell, an entrepreneur and investor, assured these measures present a marketing trick rather than a real measure to protect the New Yorkers. Odell published a tweet on his official Twitter account: “This is just a publicity stunt under the guise of protecting his constituents. If any regs come from this, it will only hurt New Yorkers, not help. Rather than comply with the Bitlicense, many businesses just blocked NY users instead. No reason to expect a different outcome here.”
On the other hand, the AG’s office says the following about the initiative: “The Initiative stems from the Attorney General’s duty to protect consumers and ensure the fairness and integrity of the financial markets. Before trading on a new platform, sophisticated investors routinely demand robust disclosures, allowing them to assess the platform’s operations and the adequacy of its policies and internal controls. The questionnaire delivered to the virtual currency platforms asks for similar information so that average investors can better understand the risks and protections.”
Odell also reminded that when the BitLicense regulation were published by the New York State Department of Financial Services (NYSDFS), a lot of information was asked from the users and this made the cryptocurrency exchange abandon the state of New York rather than apply these measures.
Moreover, the state of New York also introduced measures against the mining of cryptocurrencies. Last Month, the The New York Public Service Commission (PSC) approved a special rate for the users of electrical energy that require more than 300 kW of power and a charge density of more than 250 kWh.