Is It Illegal To Use A Crypto Exchange That Is Not Licensed In New York
Our research suggests that it is not currently illegal for a buyer to use an unlicensed Exchange in New York. It is the exchange that is at fault for selling to you.
However, platforms that may then be forced to close their services may not give much warning to affected customers before closing accounts!
This means you could lose access to your crypto held on the exchange, or suffer financially from having to move your crypto assets in an unplanned way.
You should do your own research as the crypto world changes quickly. Crypto companies are currently building a lobbying army to influence state-level regulation.
Why Is Kraken Crypto Exchange Under Us Treasury Investigation
The New York Times reported that the US is investigating whether the Kraken crypto exchange has allowed users in Iran to trade digital tokens despite US sanctions.
The US Treasury Department is probing whether the Kraken crypto exchange has allowed users in Iran to trade in digital currencies on the platform and violated US economic sanctions, the New York Times reported.
The probe by the Treasury Departments Office of Foreign Asset Control comes after the US Commodity Futures Trading Commission fined Kraken $1.25 million in September last year for illegal off-exchange digital asset trading and failing to register as required.
The Times report, citing sources familiar with the matter, said that Kraken is suspected of flouting US sanctions by allowing users in Iran to buy and sell digital tokens.
NEW: The crypto exchange Kraken is under federal investigation for possible sanctions violations linked to accounts in Iran and other countries. w/ @RMac18:
David Yaffe-Bellany
The US government has tightened its supervision of crypto companies lately amid hacking attacks and a falling crypto market. Currently, there is no single regulatory body for the crypto market.
Several crypto firms have recently suspended withdrawals due to the sharp fall in the prices of digital assets.
Kraken Vs Binance: Features
Unlike platforms such as Coinbase, Kraken and Binance cater to investors with some trading knowledge. They offer advanced trading features, allowing investors to place , stake crypto, or perform many other types of transactions. However, specific transaction types, such as margin trading, arent available for U.S. users on Binance but are supported on Kraken.
Furthermore, there are stark differences between the Binance and Binance.US sites. For example, U.S. residents wont find details about the Binance Visa Card, have a rewards center for earning crypto, or see the Binance Academy on the Binance.US website. Instead, Binance.US is a pared-down site with an FAQ knowledge base and crypto exchange. However, both sites offer advanced charting options similar to Kraken.
In comparison, Kraken is a U.S.-based exchange where international and U.S. investors use the same platform. While global users can access more transaction types and coins, the site feels less limited than Binance. Kraken offers the Kraken Terminal with advanced charting features for Kraken markets and a robust Learn section with videos, tutorials, and a podcast.
Plus, Kraken offers a standalone platform called Cryptowatch. Its a premium trading terminal with real-time data and charting.
Also Check: How To Apply For Llc In New York
Bitcoin Mining In New York
In September 2021, a Suffolk County Center IT supervisor named Christopher Naples was charged with theft and misconduct for setting up 46 mining computers at the facility. The machines were hidden under the floorboards and itâs estimated that about $6,000 of electricity was stolen. Naples is facing up to 15 years in jail for the mining operation. It is still unknown how much crypto was mined during the time the machines were operating.
It is never a good idea to steal electricity to mine cryptocurrency. A better and safer way is to make a purchase through an exchange, like those outlined above.
Kraken Vs Coinbase Frequently Asked Questions
Kraken and Coinbase both offer a vast range of security features for retail traders and institutions. With Kraken, your account includes two-factor authentication, monitoring for suspicious activity, email confirmations for withdrawals, SSL encryption, account timeout, 24/7 customer support, and account recovery options. Plus, Kraken secures 95% of deposits through offline storage, and it employs penetration testing to ensure its systems are secure.
Coinbase offers two-factor authentication, security prompts, multi-approval withdrawals, account monitoring for any potential threats or data breaches, password encryption, notifications for security changes in your account, and 24/7 customer support. Coinbase also offers offline storage for institutional assets.
Overall, both crypto exchanges take several measures to keep your cryptocurrencies safe. Many of their security features are similar, so it may also be useful to examine each platform’s history with hacks and data breaches before making a decision.
Though Coinbase is a better platform for beginners, thanks to its learning rewards and easily navigable interfaces, Kraken is also a good idea for crypto newcomers. Its mobile apps are highly rated both for iOS and Google Play devices, you can complete crypto transactions in minutes, and it offers a Learn Center with copious educational materials on cryptocurrency topics.
Read Also: How To Open A Liquor Store In New York State
Exchange Hacks And Crypto Scams In New York
Despite the aggressive approach that the New York Attorney General has taken to crypto regulation and prosecution, some shady people have still attempted to make a quick buck off naive investors.
Perhaps the biggest crypto scam related to New York is the most popular stablecoin: Tether . The New York Attorney General, Letitia James, has brought a suit against Hong Kong-based iFinex Inc. – the operator of Bitfinex and the owner of Tether – alleging that the company to cover unreported losses.
This could have been a hack of Bitfinex, who would have then decided to coverup the intrusion and payout customer withdrawals by creating new Tether.
Tether, which claims though has never definitively proven to be backed 1:1 by U.S. dollars, denies the allegations and is disputing them in court.
On a smaller scale, there have been a number of people charged in New York for Bitcoin scams.
One man was arrested at JFK airport on his way back from Ukraine, where police found him in possession of thousands of ill-gotten credit card numbers. The DoJ alleges that Vitalii Antonenko earned more than $140,000 in BTC from selling these card numbers over a period of six years.
Antonenko used SQL injection attacks to scour the internet for websites with vulnerabilities that were likely to expose sensistive information, from where he obtained the credit card numbers. Police were alerted after seeing a large volume of BTC exchanging hands on a third-party website for well below the market rate.
Kraken Vs Coinbase: Cryptos Available
If you want to buy major cryptos like Bitcoin, Ethereum , or Cardano , you’ll find them on both Coinbase and Kraken. Both list almost all the top 20 cryptos by market cap, along with many smaller coins and tokens. Both platforms have a decent range of smart contract cryptos, gaming and metaverse tokens, decentralized finance cryptos, and other types of crypto.
In terms of numbers, Coinbase has the edge with over 210 cryptos, the majority of which are available to U.S. investors. There are almost 200 cryptos listed on Kraken. However, about 40 of them aren’t available to U.S. investors. A number of Coinbase cryptos aren’t available to New York residents, but since Kraken doesn’t work at all in New York or Washington state, Coinbase is still ahead here. On that note, Coinbase is not available in Hawaii.
Recommended Reading: What Part Of New Jersey Is Closest To New York
Why Q3s Gdp Print Doesnt Mean Recession Avoidance
The report, formally titled the Virtual Markets Integrity Initiative report, included findings from nine other exchanges, including Bitfinex , bitFlyer USA, Inc., Bitstamp, Ltd., Bittrex, Inc., Coinbase, Inc., Gemini Trust Company, itBit , and Poloniex .
The report targeted five areas: where the exchanges do business, their trading policies, how they manage conflicts of interest, security, and how they access consumer funds. After each section, the attorney general provided a warning that the above exchanges were not considered in the findings.
In the case of Kraken, which is among the oldest exchanges on the list, the reason for its refusal to participate has been made very clear. In August 2015 Kraken formally left the New York jurisdiction, citing concerns about the cost and reach of the states burgeoning BitLicense, which many argued was more onerous that even traditional financial regulation.
It is a creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth, Kraken wrote at the time.
Then, in April 2018, Kraken founder Jesse Powell publicly refused to answer questions from the New York attorney general. Having the requested information ‘on-hand’ is not the same as having the resources to compile it neatly to fit the framework of the request, within 2 weeks, he tweeted.
In spite of Kraken’s refusal to participate, or perhaps because of it, the report concluded:
I Assume Cryptocurrencies Are Regulated So How Much Can Adams Do
They are â in fact, New York state is one of the hardest places in the country to get a business license to buy and trade cryptocurrencies, experts say. Mesidor referred to the stateâs regulations as âhostileâ to cryptocurrency trading. New Yorkâs license is called a BitLicense, and currently only 29 companies have approval through the state to trade cryptocurrencies. This year, the stateâs Department of Financial Services granted only three such approvals, according to its website.
In June 2020, the DFS announced a partnership with the State University of New York to create a start-up incubator for cryptocurrency businesses called SUNY Block, which would help fast-track the start-upsâ applications for BitLicences. More than a year later, the DFS is still âin discussionsâ with SUNY on starting the program, according to Sophia Kim, a DFS spokesperson, and no licenses have been granted through it.
“BitLicense requirements serve purposes including consumer protection, safety and soundness of the entity, market integrity, and the prevention of money laundering and other crimes,” Kim said in an emailed statement. “The State welcomes and encourages virtual currency companies to start up and enter the New York market.â
âThe finance industry is really regulated out of Washington, not out of Gracie Mansion,â Yermack said.
One thing Adams could do, however, is create a municipal version of the technology that cryptocurrency relies on: the digital wallet.
You May Like: Does New York New York Hotel Have A Pool
Kraken Review 202: Pros Cons And How It Compares
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Where Kraken Falls Short
Limited funding options: Kraken has limited options for U.S. customers who want to put money into their account. The platform uses a service called Trustly to allow people to connect their bank accounts, and Kraken says this method works with more than 1,000 financial institutions. But if your bank is not among those institutions, youll have to wire money into your account a process that can involve calling your bank to arrange the transaction.
Not available everywhere: The exchange is not open to people in New York or Washington state.
Recommended Reading: Dumbo Brooklyn Apartments For Sale
What Is The Best Way To Buy Crypto In New York
Despite the restrictions of the BitLicense, if youre looking to buy crypto the safest and easiest way to do so is still via an exchange.
Coinbase Pro has the lowest fees and supports the greatest number and types of transactions. however, if you are a beginner, you may prefer to open a Coinbase account first and move your assets over to a Coinbase Pro account when you become more confident and wish to use more advanced trading tools.
Because Of The Bitlicense Are Crypto Exchanges Legal In New York
The short answer is: yes.
As long as a company holds a valid BitLicense while doing business in New York or with New Yorkers then they are perfectly within the law to provide cryptocurrency services. This is exactly what the BitLicense was created for.
The first crypto company to receive a BitLicense was Circle – the company you may know as being in charge of the USDC stablecoin.
Since then, an additional 24 firms have received approval from the , including well-known exchanges such as Gemini and Coinbase, as well as XRP II, Ripple’s legal entity.
Some exchanges, however, Bitfinex and included, decided to terminate their New York-based operations rather than applying for a BitLicense.
Criticisms were leveled at the heavy-handed approach to regulation that the NYDFS was taking and the lengthy application process for a BitLicense. Many feared that these two factors in combination would kill the grassroots growth that made Bitcoin truly decentralized.
While the NYDFS has signalled that it may be open to relaxing the terms of the BitLicense in order to draw talent and capital to the state, the regulations are still in full force for the time being.
You May Like: Good High Schools In The Bronx
How Has His Enthusiasm Been Received
Adamsâ hype has excited crypto die-hards, who have come to rely on viral interest in cryptocurrencies to drive value in the various coins.
But he is still regarded as a newcomer. Cleve Mesidor, a public policy advisor for Blockchain Association, a lobbying group, said she realized Adams was new to cryptocurrency in the spring, when he referred to âbitcoinsâ in plural â an ungrammatical faux pas in the crypto world.
âIt was not surprising that once he was elected, he went deeper,â she said. Still, she said, âNone of his ideas are new, none of them are necessarily controversial.â
Some experts see little substance in his pronouncements so far, and little evidence that he has a technical understanding of the technology. In a recent interview on CNN, he sidestepped a question about how bitcoin works to say broadly that it is a ânew way of paying for goods and services throughout the entire globe.â
âI suspect heâs probably not as conversant with the details of bitcoin in particular and how it works as he is with just the fact that it has a sort of hipness and a cache to it,â said Robert Hockett, a professor of financial regulation at Cornell Law School.
A representative for Adams did not respond to an emailed list of questions.
Bitcoin & Cryptocurrency Trading In New York
New York can lay a convincing claim to be the center of world finance. Certainly, the city is the undisputed capital of American banking and business.
With the face of finance changing so rapidly over the last two decades, you may think that the New York establishment would be open to new ideas, new technologies, and new forms of money.
New York was an early haven for Bitcoin enthusiasts and innovators, such as Charlie Shrem’s startup BitInstant which was founded in Brooklyn in 2012.
Yet the aggressive approach that New York’s financial regulators have taken makes things difficult for many New Yorkers looking to get into crypto.
The BitLicense – a license only issued to government-approved firms – means that all exchanges and cryptocurrency service providers operating in the state are highly regulated. It could be argued that this protects New Yorkers from shady operators, or that it drives them to seek out other, less regulated providers.
The introduction of the BitLicense was met with applause by some sections of the crypto community – such as Gemini’s Winklevoss twins – and resignation by others such as ShapeShift, Bitfinex, and Kraken, the latter of which called it “a creature so foul, so cruel that not even Kraken possesses the courage or strength to face its nasty, big, pointy teeth.” No other U.S. state has taken such a proactive approach to the creation and tightening of laws regarding cryptocurrencies and digital assets.
Read Also: What Hotels Are Near Penn Station In New York
How Many People Own Bitcoin In New York
8% of New York adults currently own Bitcoin, according to an online Google survey of 1,036 people conducted across March 27-April 5 2022. However, an additional 5% said they dont own Bitcoin yet but plan to buy some in 2022, meaning Bitcoin adoption in New York could hit 13% by the end of the year.
Crypto Exchange Kraken Likens Ny Attorney General To A ‘controlling Ex’
Lily Katz, Bloomberg News
— New Yorks attorney general isnt happy with popular cryptocurrency exchange Kraken. The feeling is mutual.
The states legal chief said Tuesday that the San Francisco-based firm and two other digital-coin marketplaces may be operating illegally in New York. Kraken Chief Executive Officer Jesse Powell, known for his candid remarks on the internet, took to Twitter to express his displeasure.
Earlier this year, New York asked 13 major crypto exchanges for details on their operations, internal controls and safeguards against market manipulation and fraud. Nine of the platforms participated, while the other four, including Kraken, claimed they dont allow trading in the state. Attorney General Barbara Underwood said in a report Tuesday that her office referred Kraken, Binance and Gate.io to the New York Department of Financial Services for possible violation of digital-currency regulations.
Kraken has said that it stopped operating in New York after the state in 2015 created the BitLicense — a special permit that applies to virtual-currency exchanges — which has drawn criticism from crypto companies for being too burdensome. In April, Powell called the states inquiry insulting. The next month, he said in an interview that the attorney general doesnt have authority over Kraken.
–With assistance from Luke Kawa.
To contact the reporter on this story: Lily Katz in New York at lkatz31@bloomberg.net
©2018 Bloomberg L.P.
You May Like: Manhattan Orthopedic And Sports Medicine