New York financial regulator revisiting controversial BitLicense

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Operating in the state of New York has been a dream for most blockchain startups, but some had to abandon it due to the rigorous process involved in acquiring a BitLicense. However, this could all change, with the New York Department of Financial Services (NYDFS) revealing that it was reviewing the controversial license.

NYDFS Superintendent Linda Lacewell made the reveal during the DC Fintech Week at Georgetown University. Lacewell believes that the review is necessary so that the regulator can ensure it remains objective and that the license encompasses all the changes that have taken place in the industry since the license first came into effect over four years ago.

She stated, “This is a good time to take a look, a responsible look and see how our regime is fitting the current market and what, if any adjustments, should we think about making to continue to adapt to sort of a changing industry. That’s going to be one of the things that we do.”

Despite the promised review, Lacewell believes that the BitLicense has been working as it should and that it has succeeded in its job; that of protecting the New Yorkers from losing their investments. She added that the existing regulations and requirements will be retained even after the review. However, the regulator wants to hear from crypto companies and other industry participants on what they feel could be improved to make the state of New York a better working environment.

Lacewell concluded, “Maybe there’s some things that could be within a license’s discretion, maybe there could be all kinds of permutations and our mind is open. With any new and emerging industry, it’s good to take a close look and see if there’s any aspect maybe where there’s something we need to add.”

Since it came into effect, the BitLicense has been issued to 22 companies so far. At first, it was quite difficult for the companies to acquire the license, with only six companies acquiring it in its first three years of existence. However, in the past one and a half years, 18 companies have acquired it.

In spite of the rising number of companies acquiring the license, there are some high profile companies that have either failed to acquire it or that have decided to abandon the quest. The most renowned is Kraken, a crypto exchange that was involved in a feud with the NYDFS. Kraken exited New York in 2015, just after the BitLicense came into effect. The exchange’s CEO Jesse Powell has been very critical of the NYDFS, and at one time equated it to a jealous ex who just won’t let go. Fellow American exchange Bittrex also failed to acquire the license this year, blaming it on ulterior motives by the regulator.