Financial regulators at the Department of Financial Services (DFS) may be skeptical about bitcoin, but even so, they wanted the state to be virtual currency central last year when they developed a licensing process. Virtual currency firms that want to hold and exchange virtual funds for U.S. and other currencies have been required to apply for a “BitLicense” since June 2015. Top people including the head of DFS left the regulatory agency shortly after the new rules and licensing process were put in place, however, which has made BitLicense application approval anything but a “New York minute.”
“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,” said Patrick Murck, an attorney and fellow at Harvard University’s Berkman Klein Center for Internet & Society.
Since June 2015, only two BitLicenses have been issued, with 15 pending. Four applications were denied and four other virtual currency firms withdrew their applications. Companies already operating in the state can continue while awaiting license approval, but new ventures are stalled.
According to Reuters, the slow license approval process and the state’s operations requirements, which call for disclosure of what some see as personal information about users, cause companies to go elsewhere.
The BitLicense application fee is $5,000. Required information and disclosures can add up to 500 pages. The regulators want to see business models, organization charts, ownership information, compliance manuals, and require executives’ fingerprints.
“It’s too overreaching and burdensome, especially for the smaller companies,” GoCoin CEO Steve Beauregard said to Reuters, arguing that getting a license in New York isn’t worth the effort.
Beyond concerns about money-laundering or tracing funds, transactions, and the individuals involved, most U.S. states and much of the world wants to attract virtual currency business. Amid the concerns about the BitLicense approval process, Jerry Brito, digital currency and advocacy group Coin Center’s executive director said, “I think it’s going to be rare that companies say, ‘We’re not going to do business in New York.'”
The new DFS head, Maria Vullo, said they are being thorough in their checking but want to move the process along and clear the backlog, Reuters reports.
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