Bitcoin exchanges claim they were run out of New York by increasingly difficult to comply with licensing and regulation.
More than a dozen exchanges left New York for elsewhere in America alleging heavy-handed officialdom as the reason for their departure.
Now, State Attorney General Eric Schneiderman is ratcheting up the pressure.
He has written to 13 exchanges asking for detailed operating information across 34 topics.
“Representing a technological advance, a medium of exchange, and an investment opportunity all at once, virtual currencies are inspiring innovators, entrepreneurs, and investors—and are fuelling an increasingly diverse ecosystem of companies and applications,” says the letter.
Market manipulators and thieves
“But virtual currency is also a highly speculative sector, featuring significant volatility, instability, and risk. Moreover, published reports indicate the sector has attracted fraudsters, market manipulators, and thieves.”
Schneiderman has orderedthe exchanges should comply with his demands by May 1.
He intends to publish the responses for consumers to safeguard their interests.
“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,” said Schneiderman.
New York is regarded as a difficult place for Bitcoin exchanges to operate, with few managing coveted accreditation.
Disrespect and hostility
Now, the CEO of one of the largest US exchanges which left New York two years ago, has challenged Schneiderman.
“We did all this already,” Jesse Powell has responded. “And then you gave us a BitLicense. Why don’t you try extracting this information from businesses actually operating in your state?”
Powell argues the time and resources he needs to comply with the request is ‘massive’.
“The audacity of these guys,” he wrote in a blog. “The entitlement, disrespect for our business, our time! Then I realised we can dodge this bullet because we are not in New York. Ordinarily, we are happy to help the government understand our business, but this is not the way to go about it.
“Kraken left New York because New York is hostile to crypto and this questionnaire shows New York is also hostile to business.”