Why you can trust us

Engadget has been testing and reviewing consumer tech since 2004. Our stories may include affiliate links; if you buy something through a link, we may earn a commission. Read more about how we evaluate products.

New York to investigate cryptocurrency exchanges

More transparency is needed to help consumers and investors know what's up with their money.

As the SEC and other US regulators look for ways to deal with cryptocurrency, New York is taking a step forward. The state's attorney general, Eric T. Schneiderman, sent letters to 13 virtual currency exchanges on Tuesday that request specific disclosures about how each company manages its business.

Schneiderman's office also launched the Virtual Markets Integrity Initiative, which it describes as "a fact-finding inquiry into the policies and practices of platforms used by consumers to trade virtual or 'crypto' currencies like bitcoin and ether."

More people are investing their money into these currencies, and Schneiderman believes that they have a right to transparency and accountability from exchanges, which may not make things as clear as they should be to consumers. With reports of theft, sudden trading outages, potential market manipulation and difficulties withdrawing funds, Schneiderman said, it's essential to get the requested information out as clearly as possible.

The letters contain a fairly exhaustive questionnaire so exchanges can disclose the ownership and control of each company, details on basic operation and fees, the specific trading policies and procedures, information on outages and trading suspensions, what internal controls are in place and policies on privacy and money laundering.