In brief
- New York’s financial regulator proposed a plan that would aid crypto companies in receiving correct licenses.
- Currently, crypto companies that operate in New York must be in possession of a BitLicense, to receive, store, issue or send cryptocurrencies.
- NYDFS proposes a conditional license that would allow crypto companies to work with companies that have already obtained a BitLicense.
New York’s top financial regulator today proposed a plan that could make things easier for cryptostartups.
Under the proposition from the New York Department of Financial Services (NYDFS), for which the NYDFS is soliciting public opinion until August 10, it would become easier for crypto companies to receive the correct licenses.
As it stands, crypto companies operating in New York must obtain the “BitLicense,” which is a license that crypto companies and exchanges need to receive, store, issue or send cryptocurrencies. (Exchanges need them to operate in New York, for instance).
Just 25 firms have been granted the license since the state started introducing them in 2015; getting one can take years. Tagomi, Circle and Robinhood are among recipients.
The NYDFS is now proposing to introduce a “conditional” license with which crypto companies could work with companies that have been issued with an actual BitLicense. “DFS expects that an entity that seeks a Conditional License will endeavor to eventually seek and obtain a full BitLicense,” it wrote.
To receive a conditional license, crypto companies must indicate their intention to work with the holder of a BitLicense and draft an agreement accordingly. Then, the crypto companies must submit documents to the NYDFS, who’ll later review them.
If all goes well, the DFS will promise to keep watch over the crypto company and produce a list of stipulations that the company must abide by. If the crypto company strays, the NYDFS “may, at any time, discontinue the conditional licensing.”
That’s all the NYDFS has worked out so far. It’s asking the public for advice. What types of companies should it offer licenses to, what should the remit of the license be, what should the NYDFS look out for, and so on.
But that’s not all.
It also introduced new guidance that lets crypto companies, like exchanges, “self-certify” listings of new coins.
The catch is that the companies have to get the NYDFS’s approval to self-certify, and be damn sure of themselves—a wrong move could get the NYDFS clawing at their back. Also, crypto companies can’t self-certify privacy coins or gambling coins (coins specially designed for the online casino industry).
Companies might be willing to play things safe—BitLicenses, after all, are easier to lose than they are to obtain.