NY regulator investigating bitcoin practices
New York's top banking regulator has issued subpoenas to several companies associated with bitcoin as part of an inquiry into business practices of the virtual currency industry.
The subpoenas issued by the New York Department of Financial Services (DFS) seek information on antimoney laundering programs, consumer protection measures and investment strategies, among other topics.
Benjamin Lawsky, who heads the DFS, expressed concern that virtual currency companies are not complying with the state's money transmission laws.
Companies that received subpoenas include Coinbase, BitInstant and Coinsetter, according to a report in The Wall Street Journal.
Jaron Lukasiewicz, chief executive of Coinsetter, said in an email to the WSJ that the information request is "an opportunity for companies in our space to open up a much needed dialogue with regulators."
He added that the regulator will find that most companies are working to legitimize Bitcoin and "want to build bridges that help regulators understand and support these financial innovations."
Lawsky's memo also outlined plans to set new guidelines aimed at virtual currencies.
"We believe that—for a number of reasons—putting in place appropriate regulatory safeguards for virtual currencies will be beneficial to the long term strength of the virtual currency industry," Lawsky wrote in a memo released on Monday.
(Read more: Beware of bitcoin-related Ponzi schemes, says SEC)
Bitcoin, which has been embraced by a number of venture capitalists in Silicon Valley, exists through an open-source software program that any users with enough skill and computing power can access. It is not managed by a single company or government. Users can buy bitcoins through exchanges that convert real money into the virtual currency.
—Reuters with CNBC.com