By
Bena Ilyas
April 18th, 2024
The New York Department of Financial Services proposed new licensing rules that would make it easier for companies to work with crypto in the state by earning “conditional” BitLicenses to operate cryptocurrency businesses.
The financial regulator of New York scheduled new licensing rules that would optimize engaging in cryptocurrency business for companies especially if they decide to use digital currencies like Bitcoin in the state.
The New York State Department of Financial Services is seeking the public’s answer regarding this plan by August 10. The action arose from the “actual or perceived hurdles” that companies may challenge in getting the state’s “BitLicense,” revealed in 2015, the regulator said.
New York’s proposed framework would enable companies that want to engage in virtual currency business activity in the state to get a so-called conditional license, through which they would hook up with fully licensed companies, NYDFS said.
Making of FinTech Sector
New York brought in its BitLicense and initial framework back in 2015 when other regulators were still pretty much cautious when it’s about virtual currencies. Those currencies are now part of a wider, fast-rising industry that combines finance and technology, and which leading financial centers are eager to captivate.
Still, getting New York’s current BitLicense can be a very long process that could last for years, virtual currency companies have said.
For now, the state has granted 25 virtual currency licenses and charters since 2015, NYDFS said.
The regulator on Wednesday also rationalized possibilities for companies to offer and use new coins. The regulator will also get a list of pre-approved coins from which users can select and then self-certify they are using without having to get additional approval.
NYDFS Superintendent Linda Lacewell explained these moves come in response to feedback from the crypto industry and other parties.
She said:
“I said at the end of last year, we’re going to take a fresh look at that license and see how it’s working and not working and how we can improve. One of the things that we heard loud and clear is that we should find opportunities to open up the fields, that our license is good and solid, but we need to make it more available.”
New York as a Center of Cryptocurrency Activities
She also added that plenty of the activity tends to be centered in New York City when it comes to New York and cryptocurrency businesses and initiatives so “why not open that up to the whole state?”
On the other hand, entities could partner with an already-licensed exchange or startup and try to secure a conditional license that way.
Lacewell commented:
“When we looked at our virtual currency license, there is a provision right in there, which we have never used … that allows me as the Superintendent to grant an application for a conditional license. And that license lasts by its terms for two years unless we convert it to a permanent license or unless for some reason it’s not working out.”
CEO of the first BitLicense recipient Circle Jeremy Allaire noted that while the initial 2013 draft seemed too binding, the final license set an acceptable position, even if securing one still required companies to meet a high bar.
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