As cryptocurrencies continued shaking off their April hangover, the state of New York is trying to figure out what to do with this whole coin thing.
On Tuesday, New York Attorney General Eric Schneiderman announced something called the Virtual Markets Integrity Initiative, a state-level effort to examine the policies and practices of the major cryptocurrency exchanges. Schneiderman’s office emphasized to TechCrunch that the endeavor is a “a fact-finding inquiry” and not an “investigation” as it’s not apparent there is any wrongdoing.
“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,” Schneiderman said.
“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.”
Schneiderman’s office is often early to defend consumer rights in the state of New York, so the cryptocurrency inquiry is very in line with the kind of work his office already does on behalf of New York state residents.
The attorney general’s office addressed a standard questionnaire to 13 cryptocurrency platforms, from the biggest names in the business to more obscure exchanges.
The letter seeks basic information about the company’s operations, broken down across eight major categories. Those questions span from basic inquiries about ownership to anti-money laundering precautions to a request for a detailed breakdown of the fees that consumers might incur. You can read the full text of the “Virtual Markets Integrity Initiative Questionnaire” here.
Again, the letter is a broad, standardized fact-finding mission, not an investigation based on specific knowledge. Schneiderman’s office clarified that the initiative seeks to illuminate any potential for market manipulation, abrupt trade outages that go unexplained, and problems customers have withdrawing funds, among other cryptocurrency trader headaches. Still, it’ll tap into some thorny issues (money laundering, anyone?) that some exchanges might not yet have a proper way of handling. Ultimately they hope to use that information to make these platforms more fair and transparent for consumers, regulators and investors alike.
While anxious bullish investors might see the New York inquiry as a threat, many of the relevant exchanges are taking it in stride so far (at least so they say) even applauding the inquiry’s effort to create more transparency that could pave the wave for thoughtful rather than heavy-handed regulation.