New York regulators to link companies to ‚gatekeepers‘ for conditional BitLicense
Juli 1, 2020
The New York State Department of Financial Services, or NY DFS, is proposing a „BitLicense Conditional License“ framework to reform its controversial BitLicense regulation introduced in 2015.
In a request for comments issued on June 25, the regulator details its reformed approach to issuing conditional BitLicenses. This type of license had existed since the program’s inception, but there were no clear rules for accessing it, as it was entirely at the regulator’s discretion.
The new framework would allow potential licensees to work with an existing BitLicense licensee to obtain specific guidance regarding structure, capital, systems, and staffing requirements.
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A clear path to a conditional license
The proposal would help overcome „real or perceived obstacles“ to obtaining Bitcoin Method by using the expertise of an existing licensee.
The statement details a general procedure for applying for the conditional license. Applicants should express their interest in the programme by contacting DFS with a pre-compiled draft service level agreement with a licence holder.
The applicant must provide documents and information as directed by DFS, which will be tailored to the specific type of business and risks presented by their activity.
SoFi obtains a BitLicense to offer cryptomoney trading services in New York
If the procedure is successful, the applicant will sign a supervision agreement with DFS and obtain a conditional BitLicense. The regulator expects companies to eventually seek a full licence.
The program is designed primarily for new, smaller companies and „growing businesses,“ as well as for established companies that wish to enter the crypto ecosystem.
However, the regulator is accepting comments from interested parties on the proposed program within the August 10 deadline.
New York’s governor wants crypto businesses to cover the costs of NYDFS oversight
Background on BitLicense
The New York State licensing program has been widely criticized in the past for its rigour and complexity. As 2020 approached, the regulator sought to improve some of the criticism by amending it for the first time in nearly five years.
This came after the establishment of a crypto-money working group in July, which could have spurred reform.
While some major exchanges operating on U.S. soil, such as Kraken and Binance.Us, did not obtain BitLicense and therefore cannot serve New York-based customers, other companies are still willing to overcome the obstacle.
The hurdle could become significant since New York Governor Andrew Cuomo had proposed in January that the companies would cover the costs of DFS oversight.