NYDFS To Ease Bitlicense Approval Process as the Crypto Regulation Turns Five
The New York Department of Financial Services (NYDFS) has suggested modifications to Bitlicense's issuance to make the state more crypto-friendly.
This license – introduced in 2015 – is now five years old, and has dramatically impacted crypto operations in New York since its introduction. While most crypto businesses view it as an obstacle, some companies find it to be within an achievable scope for compliance.
Currently, only 25 crypto firms have been approved by the NYDFS to carry out business in the big apple. The approval might, however, change given new proposals that seek to introduce conditional licenses and self-certifications as part of smoothening the approval process.
This initiative will allow crypto firms looking to enter the New York market to obtain a conditional license by working with entities whose Bitlicense was already approved. According to the NYDFS' logic, a firm that gets a provisional license will eventually seek the Bitlicense as it scales operations:
“DFS expects that an entity that seeks a Conditional License will endeavor to eventually seek and obtain a full BitLicense.”
Consequently, the new market entrants must document their intention to work with a Bitlicense holder. This will then be reviewed by the NYDFS coupled with a follow-up should an entity be granted the conditional license. In the event where a provisional license holder goes astray, NYDFS can step in to discontinue the approval.
To further advance its impact, the NYDFS has introduced a guideline on self-certification for crypto assets that are still in the pipeline.
However, this only applies to licensed entities and will need the approval of at least three firms to self-certify that a crypto asset meets NYDFS rules. Linda Lacewell, an NYDFS Superintendent, said that this move is meant to boost crypto businesses while maintaining proper oversight:
“We want to regulate … as much as we have to and not a drop more because businesses need to do business and they need to operate.”
State of Crypto Business in New York
As mentioned earlier, the Bitlicense has significantly shaped New York's crypto ecosystem. Notable players that currently operate under the ‘strict' measures include Circle, BitFlyer, and Bitstamp.
According to BitFlyer's Chief Compliance in the U.S, Dave Zacks, the approval process was, however, not easy and took almost a year:
“We don’t know how many applications NYDFS has under review currently, but the requirements are strict, and a lot of newer smaller entities don’t have the capital or capability to meet those standards.”
Nonetheless, crypto stakeholders eyeing the New York market can now try their luck with better odds. Such a move would not only be beneficial in terms of market share but also in building a trustworthy business having qualified to operate in the world's financial hub.