Approval of a BitLicense application by Genesis Global Trading signals renewed hope on the relationship between the state of New York and the cryptocurrency industry.
Despite New York’s position of being an international financial hub, many in the cryptocurrency field, are critical of the State’s Department of Financial Services’ (DFS) regulations which are enforced through the BitLicense.
Earlier this year, senators Jesse Hamilton, and David Carlucci invited several cryptocurrency industry players to a meeting. It is at this meeting where the companies strongly criticized the BitLicense that was introduced in 2015. They stated that the one-size-fits-all regulation by DFS was to large a burden for small companies to bear. This to them meant the burden would stifle innovation.
Only For A Few
Even before BitLicense came into effect, speculation was high that only large companies processing huge capitals would be in a position to comply. Editor of the Media Lab Digital currency initiative reiterated that only a handful of the well-funded companies would survive unless changes were made to the BitLicense. The companies would qualify just because of their vast resources not because of their innovation, he warned.
The DFS has listed five different activities that interested companies can engage in, and provided they meet the regulatory requirements the BitLicense would be issued. Examples of activities include Virtual currency transmission, performing exchange services as a customer business among others.
Regulatory requirements also include five items to be met such as, companies must invest in New York Bonds, records of transactions must be kept for 10 years, to name a few.
Other than meeting the above requirements companies also have to fill a whole 31-page application form. These stringent requirements seem to be putting off companies. Despite it being in force for the last three years only five crypto-companies have been granted a BitLicense in New York.
Other companies have been unable to cope and hence, forced to flee the state. Examples of companies such as ShapeShift, Kraken, Rebit, BetFinix have left the state as a result of the tough regulations.
The consensus 2018 panel agreed that the BitLicense enforcement was more harmful to the state than for the international cryptocurrency community. They found this to be in contrast to the inviting attitude toward cryptocurrency and blockchain as a whole by the state.
Genesis Global Trading which is a cryptocurrency broker was granted a BitLicense enabling it to operate in New York. The BitLicense will allow the company to facilitate the trading of Bitcoin, Ethereum Classic, Ether, BCH and others.
Although the state seems to have discouraged its relationship with the crypto industry the approval to Genesis Global Trading seems to be a promising move.