Bitcoin exchange itbit hires New York Department of Financial Services lawyer to take on compliance role

ItBit exchange has hired Daniel Alter, former general counsel of the New York Department of Financial Services, as general counsel and chief compliance officer.

Alter worked at the New York Department of Financial Services for three years and officially left in February this year. During his tenure, he participated in the establishment of the New York State Bitcoin License System. This controversial license system was established to regulate virtual currency transactions that explore serving American consumers. This move may be surprising because Alter’s speech at the New York Bitcoin License Hearing in early 2014 was still skeptical of blockchain technology.

During the two-day hearing, Alter was perhaps the most vocal of the New York Department of Financial Services representatives on the potential negative aspects of virtual currency regulation, saying that New York State’s anti-money laundering responsibilities should take precedence over innovation and that the mining community of decentralized payment networks is a “systemic threat” to its enforcement. In an interview, Alter mentioned that his view on blockchain technology has changed as he has become more fascinated by developments in the field. Today, he sees that Bitcoin and blockchain technology can solve the challenges that initially seemed to be the original cause.

“At the NYDFS, I was very involved in anti-money laundering and economic sanctions enforcement,” Alter told CoinDesk. “I think blockchain technology has powerful applications that, if expanded and more widely used, could reduce regulatory costs. Compliance often requires a lot of time and effort, and this may provide an important solution to that problem.”

Alter explained his interest in the itBit position as an extension of his focus on compliance and regulation.

“Over the past few months, the opportunity to work at itBit became apparent and I saw it as a great opportunity to pursue my interests,” he said.

As for whether the position presents a potential conflict of interest, Alter clarified his position: He was not involved in approving itBit’s New York banking license, which was obtained when the company raised $25 million in a Series A round in May, allowing itBit to serve customers and hold customer deposits in all 50 states.

Alter’s stance contrasts with that of Ben Lawsky, a former New York Department of Financial Services supervisor who has stated that he could never work as a private consultant for a bitcoin company.

“I had no prior discussions with itBit about joining them until a few months after I left the NYDFS,” Alter said. “My ethical requirements are shaped by New York State law, and I believe there are no conflicts of interest on my part, which regulators often encounter.”

Alter’s appointment coincides with ItBit’s hiring of Kim Petry as CFO, who previously served as CFO and vice president of global commercial and business card payments at American Express.

New responsibilities

Regarding his new role at itBit, Alter said he will actively cooperate with regulators to ensure that their stance on blockchain technology is communicated.

"I understand the advantages of the platform and am able to accommodate the concerns of regulators. By adjusting business and operational information, I ensure that regulators feel secure and know that everything we do is compliant," he continued.

Alter said that over the next three to six months, he and itBit staff will work together to build strategic relationships with investors while adhering to the company’s compliance requirements.

He further mentioned that he is the best person to help others understand the potential of blockchain technology in financial transactions and settlements, and to dispel the doubts that those who, like him, had when they first came into contact with blockchain technology had.

“Along the way, I’ve gotten a better understanding of what those concerns are,” Alter said.

The New York Department of Financial Services did not respond to our request for comment by press time.