Ben Lawsky, New York's superintendent of financial services, trumpeted the news with a tweet. "Big day. New York issues first charter to a virtual currency company," the tweet read, just above an image of the charter, complete with Lawsky's signature and an official New York seal.

Lawsky and New York's Department of Financial Services granted the charter on Thursday to itBit, officially approving the company's bitcoin exchange for use in the state, and on the same day, itBit opened the exchange to people nationwide, saying the charter provided the legal framework needed to operate in all fifty states. As The New York Times put it, itBit appeared to be "the winner in a race among bitcoin exchanges to become the first to be fully regulated in the United States."

Certainly, the charter is a turning point for bitcoin, the digital currency that has found an audience online and has operated with government approval in many other countries but has been slow to win approval from US regulators. Carol Van Cleef, a partner with the national law firm Manatt, Phelps & Phillips who co-chairs the firm's global payments practices and closely follows digital currencies, says the charter is, "a validation that digital currencies are here to stay."

But the turning point isn't a big as many believe it is. Though itBit says it can operate in all 50 states—and is indeed doing so—Van Cleef says some states may take a different view of the matter. "This is not necessarily going to be a blank pass to offer services in all states," she says, explaining that some states could require the company to win additional licenses beyond the New York charter. States like, say, California.

Tom Dresslar, a spokesman for the California Department of Business Oversight, says the agency has been "looking into" whether itBit's charter would allow it to operate within the state. "We're not prepared to agree that ItBit is can conduct exchange transactions with Californians under its New York certificate," he says. The charter granted by New York is an usual thing, and it's certainly new to the world of digital currency. Thus, it's effect outside New York is unclear.

In other words, New York's move—though notable—highlights the enormous regulatory complexities facing bitcoin and digital currencies, complexities that will continue to slow their adoption in the US. Bitcoin promises to provide a much simpler and much cheaper means of moving money from place to place, but that promise is easily impeded by regulatory hurdles. As Van Cleef points out, even if bitcoin wins regulatory approval, regulatory overhead could affect the cost of doing business in bitcoin.

Bitcoin companies are treading on ground where no others have. And the path to regulation is far from obvious. Even inside New York, things are complicated. The state has said its putting together a "BitLicense" specifically for use with digital currency companies, and yet it has approved itBit for operation under an existing regulatory framework.

The Trusted Charter

All that said, New York is clearly interested in moving forward, for reasons of politics, market pressure, or both. Not only did it approve an exchange before the arrival of its BitLicense, Lawsky tweeted the news. (The Department did not immediately respond to a request for comment on the matter).

New York has issued itBit what's called a trust charter under New York banking law, and according to the state, this allows the company to operate a virtual currency exchange, where people can swap dollars and other fiat currencies for bitcoin and vice versa. In March of last year, New York invited bitcoin exchanges to apply for such as charter, and it said that these exchanges would ultimately be required to meet the requirements of its as-yet-unfinished BitLicense.

Separately, itBit is adamant that the charter also allows it to operate in all other states. "By being organized under New york banking law, you more or less have reciprocity across the rest of the United States," says itBit CEO Chad Cascarilla. He even says that the charter could allow the exchange to operate in places overseas (the exchange first launched in Singapore due to the regulatory uncertainty in the US).

Cut and Paste

But as the statement from the California Department of Business Oversight shows, it's not immediately obvious whether it can operate in all other states. What's more, even in New York, itBit could have trouble winning customers under its current setup.

The company's exchange offers FDIC insurance, but this is through a third-party bank, and the company is not naming the bank. "That would be a an important issue. Investors should want to know what bank is providing these services," Van Cleef says. "It's important information to disclose to a customer."

For the larger world of bitcoin, the problem is that there's no straightforward way to win approval across all 50 states. In January, the Silicon Valley-based Coinbase said its exchange was "supported" in 24 states, including New York and California, thanks to existing regulations, but the particulars were different in different states. And Lawsky's office later said that the service did not have approval to operate in New York. On the surface, the New York charter appears more straightforward. But it may not be. "Prior regulation," says Coinbase's Fred Ehrsam, "is being applied in a cut-paste manner."