New York Regulator Considers Conditional BitLicenses For Crypto Businesses
The New York State Department of Financial Services (NYDFS) is proposing a Conditional BitLicense to make it easier for crypto firms to operate in the state. In addition, the New York financial regulator issued new guidelines for coins listing.
New York Financial Regulator Loosens Up With Conditional BitLicense
In an official press release on Wednesday (June 24, 2020), the NYDFS stated that it was considering a conditional BitLicense for cryptocurrency firms. According to the regulator, the conditional licensing is to encourage crypto businesses willing to operate in the state.
Since its inception in June 2015, the New York financial watchdog has granted its BitLicenses to 25 crypto firms, with Circle being the first recipient. However, the BitLicense has come under intense criticism because of its stringent requirements.
The DFS is now looking to make things easier for crypto businesses five years later. According to the framework, a cryptocurrency firm with a conditional BitLicense can work with a crypto business that holds an actual BitLicense.
In order to get the conditional BitLicense, the applicant will state its intention to work with a crypto business with an approved BitLicense and proceed to draft an agreement. Afterward, the applicant submits require documents to the DFS who in turn will review the documents. If the DFS is satisfied with the application, the regulator will grant the crypto business a conditional BitLicense.
Although cryptocurrency firms can operate in the state with the conditional license, the DFS expects that such businesses will “eventually seek and obtain a full BitLicense.”
The DFS is also calling for public comments regarding the proposed conditional BitLicense. Some of the questions the regulator needs feedback on include:
“What types of services and support should a VC Entity provide to a Conditional Licensee with the ultimate goal of enabling the Conditional Licensee to obtain a regular non-conditional BitLicense from DFS? In addition to the proposed framework, what other methods might DFS consider to safely and effectively facilitate entry into, and growth into, New York’s virtual currency marketplace?”
NYDFS Allows Crypto Firms to Self-Certify New Coins
The New York financial watchdog earlier announced intentions to review the controversial BitLicense, stating that it could make requirements less stringent. Granting a conditional BitLicense could help small crypto businesses who cannot currently meet up with the criteria for a full BitLicense. The deadline for the submission of comments is on August 10, 2020. Also, the DFS could revoke a company’s conditional BitLicense if found wanting.
In addition to a proposed conditional BitLicense, cryptocurrency companies can “self-certify” new coins, according to a new guideline released by the New York financial regulator. The fresh guideline comes following proposed guidance issued back in December 2019.
According to the new guideline, crypto firms wishing to list new coins in addition to coins already approved by the DFS. Also, the self-certification process will mean that crypto businesses will oversee the risks, monitoring, and business model in the coin listing process. However, privacy coins and coins designed to bypass regulations cannot be self-certified.