New York state’s financial regulator is about to issue “bitlicenses” to Coinbase and Ripple Labs, allowing the San Francisco-based bitcoin companies to operate in the state.
The New York State Department of Financial Services recently received applications from both companies, according to the regulator’s weekly report in late April. Now, an anonymous source close to the matter confirmed to Reuters that the requests will be approved, though the source did not say when the approvals would be announced.
Bitcoin is an internet-based “cryptocurrency” that allows for fast and anonymous transfer of funds among peers worldwide without using intermediaries. If the licenses are granted, Coinbase and Ripple Labs (the latter of which operates under the name XRP II) would become the second and third virtual currency companies allowed to operate legally in New York.
“We are committed to being fully compliant with all state and federal laws and applied for the license to ensure we remain so,” a Ripple spokesman told Reuters.
Last week, the regulator approved the application of Gemini Trust Co., which began the approval process in September. Gemini Trust was founded by Cameron and Tyler Winklevoss, the Olympic rowing twins from Harvard who famously sued Mark Zuckerberg claiming the Facebook boss stole their social networking idea, resulting in a $65 million settlement that helped turn the brothers into venture capitalists.
Bitcoin, which is believed to be impossible to counterfeit, is essentially a limited quantity of unique cryptographic codes made by an open-source software program that behave like a fiat currency. Bitcoins are “mined” by computers, but the more that are created the longer it takes to make more of them. Once 21 million bitcoins are created through the software, the software will no longer make more.
Bitcoin is widely considered too volatile to trade like traditional currencies, but it’s used to buy products and services. Currently, one bitcoin is worth around $450.
Banks are paying close attention to the so-called blockchain technology behind bitcoin mining because of its potential in global storage of transactions that cannot be tampered with.
The confirmed inventor of the blockchain, known only by the pseudonym Satoshi Nakamoto, is unknown. Recently, Australian entrepreneur Craig Wright claimed to be the secretive bitcoin inventor, but he has yet to produce what would be considered irrefutable evidence: the private key (the code only the bitcoin miner possesses) to the so-called Genesis Block, the first batch of bitcoins ever mined.