N.Y. Facing BitLicense Backlog after Lawsky Departure
New York State’s pioneering BitLicense program could be losing momentum after the departure of New York State Department of Financial Services (NYDFS) head Benjamin Lawsky last year. The state has issued just two BitLicenses since enacting the program in June 2015, shortly before Lawsky left the agency. Another 15 licenses are pending, while four applications have been withdrawn and four others have been denied, according to Reuters, citing an NYDFS spokesperson.
Some observers blame the backlog on Lawsky’s departure, along with some other senior staffers who helped craft the BitLicense framework, just after the requirement took effect. “By putting the regulations together and having key staff members leaving almost thereafter, they really put the industry behind the eight-ball in terms of competing with traditional service providers,” Patrick Murck, a lawyer and fellow at Harvard University’s Berkman Klein Center for Internet & Society, told Reuters.
The U.S.’s first state-level framework for licensing digital currency companies, the BitLicense was seen by some as an important step in the long-term development of the digital currency industry. However, many industry stakeholders warned that the licensing requirements were too onerous and could stifle innovation in the sector, especially among startups. Another worry was that providers would simply stop providing services in New York—and since the licensing requirement went into effect, several digital currency firms have done just that.
In August, a proposal by California legislators to create a digital currency license for that state was shelved amid an outcry from digital currency providers and advocates. However, a new version of the California bill is expected to be introduced in early 2017.