New York State Issues First BitLicense (Sept. 22, 2015)
After much debate over whether the New York Department of Financial Services’ (NYDFS) state-level framework for licensing digital currency companies is too restrictive, the state agency has issued its first regulatory license, the so-called BitLicense, to Boston-based mobile payment company Circle Internet Financial. Circle is now able to offer services involving digital currencies, such as bitcoin, in the state, according to an NYDFS announcement yesterday.
A BitLicense is required of all companies operating in New York that provide digital currency intermediary services, such as transmitting, storing or exchanging digital currency, on behalf of customers. The NYDFS finalized the BitLicense framework in June, following nearly two years of development and several revisions of the guidelines.
While several digital currency companies decided to halt operations in New York because they felt the licensing requirements were too burdensome, the NYDFS received BitLicense applications from 22 companies by Aug. 8, which was the filing deadline for businesses already operating in the state.
Circle’s founders, Jeremy Allaire and Sean Neville, had been “fairly vocal” about their concerns with the BitLicense, especially in its initial incarnation, according to their blog on the company’s Website. “Many of those issues were resolved and, though still not perfect, the BitLicense and its requirements became clear and irrefutable prerequisites for serving and supporting everyone in New York.” The company also announced it’s in full compliance with New York’s money transmitter regulations. Raj Date, former CFPB deputy director, is a member of Circle’s board of directors.
Issuing the first BitLicense was an important step in the long-term development of the virtual currency industry, according to Anthony Albanese, NYDFS acting superintendent. “Putting in place rules of the road that help protect consumers from loss or theft and root out illicit activity is vital to building trust in this new financial technology,” he said. The NYDFS will continue to evaluate and approve additional BitLicenses.