After almost 5 years of delaying the growth of cryptocurrency start-ups because of tight policies and regulation, the New York Department of Financial Services (NYDFS) have finally announced a proposal for a change of licence policy to allow for ‘virtual currency companies’ to partner with existing companies who have already attained the licence to trade.
In the summer of 2015, the NYDFS became the first state in the US to announce the adoption of a regulatory framework regarding digital assets including Bitcoin with BitLicence.
In theory this seemed a positive step for the capital, however in the years that followed many start-ups and growth companies in the space found it difficult to attain a licence because of the stringent rules attached to it. Aside from the overwhelming detail required for financial histories, perhaps the biggest problem was that a BitLicence could take years to process which stagnated and even ceased the development of many companies.
The well-known Bitcoin wallet Circle was the first to be awarded the licence in late 2015 and because of the regulations, only 6 more companies followed in their footsteps in the first two years. Since 2018, the approval rate has increased as the backlog cleared up and staff being used to the process. Now, 25 companies have attained the BitLicense including established names such as Ripple, Coinbase and Square.
The new framework, according to the NYDFS announcement, is “intended to allow a new entrant to work in collaboration with an authorized BitLicensee or a holder of a New York limited purpose trust charter during the term of the conditional BitLicense.”
Superintendent Linda Lacewell, said that the change would help “boost responsible innovation and help get New York’s economy back on its feet.” She continued on to say “when you think about the need for a contactless payment system, cross-border payments, the possibilities are really endless.” This proposal will open up the possibilities for many more companies to attain a licence and begin building services in this emerging sector.
Partnership with (SUNY)
Lacewell is also keen to see a focus towards impacting small businesses and local communities. That’s why alongside this proposed regulation change, the NYDFS have announced they will establish a crypto-based program with the State University of New York (SUNY). Virtual currency start-ups run by students across the full-span of 64 universities in the state will be able to build initiatives in the space.
New York has been a global financial hub for many years, now the state is finally building the architecture required for the new economy of virtual currencies.