New York Could Crack Down On Cryptocurrency Exchanges
It almost goes without saying at this point that one reason cryptocurrency has been able to thrive is that it’s very loosely regulated.
In fact, in much of the world, it isn’t really regulated at all, and consumers are left free to buy and sell it as they please, taking whatever risks they like in the process. In fact, it’s when cryptocurrency is regulated that we sometimes see sell-offs.
Just last month we saw an analysis in a British publication about bitcoin slumping over mere fears of a Japanese clampdown on crypto exchanges.
It’s for this reason that news of the state of New York taking a closer look at cryptocurrency exchanges is at least somewhat alarming.
The United States as a whole has more or less established a record of allowing cryptocurrency exchanges and traders to operate unimpeded – or at least, there’s been a wait-and-see approach. However, there is actually some history of New York attempting to get a handle on things.
A write-up at an Australian platform for topics relating to gaming, finance, and general news reminds us that a company called New York BitLicense was released in 2015 after a few years of research and discussion. It was an attempt to regulate exchanges, and the result was that some exchanges simply stopped trading in New York, rather than apply for licenses.
That was a few years ago and really it hasn’t had a profound impact on U.S. cryptocurrency markets (and in fact, there’s even been a recent word of BitLicense being restructured to some degree).
Building on New York’s somewhat tighter history regarding cryptocurrency, however, we did recently learn that New York is probing cryptocurrency exchanges.
On the surface, this actually feels fairly innocent, and could even be a good thing. New York Attorney General Eric Schneiderman has put the focus of the investigation on at least 13 mainstream exchanges including Coinbase, which is among the most recognizable and widely used platforms in the U.S.
And the idea, as Schneiderman put it, is that consumers too often lack basic facts they need in order to assess the fairness, integrity, and security of exchanges before beginning to trade.
The investigation by the state of New York only recently came to light, so it’s too early to say if there will be any significant effects, or what those effects might look like.
However, at this stage the mere fact that such a probe exists is a reminder of two things: first, that cryptocurrency investment can be risky not just because of the finances but because exchanges haven’t had time to build up trust in every case.
And second, that states, regions, and countries that are known for a lack of regulation may not always stay that way. The New York situation is certainly worth keeping an eye on if these topics interest you.