Any cryptocurrency based company that has considered starting its operations in the financial hub of the U.S. would be familiar with BitLicense, a term now associated with long wait times and lengthy procedures.
The New York Department of Financial Services (NYDFS) launched the BitLicense program in November 2015, and so far it has only granted licenses or charters to a total of six institutions, with the most recent license going to BitFlyer in November 2017.
Considering its New York, shouldn’t more licenses have been provided?
It’s not incorrect to think that New York has more cryptocurrency based businesses than ones which have been granted the license. Most notably, it had recently been reported that Binance, one of the largest cryptocurrency exchanges, also never applied for BitLicense, but it is still in operation and continues its day to day functions without any issues.
According to the NYDFS, any company that is applying for cryptocurrency based activity within the territory needs to apply for the BitLicense program, which leaves Binance and several other known organizations in not complying with that regulation.
However, NYDFS has not launched any crackdowns against such institutions, and experts suggest that it is to maintain market stability and how the program has been met with criticism through the industry due to various aspects.
Erik Vorhees, CEO of ShapeShift.io, a Switzerland-based business that decided not to do business in New York, had stated in the past that BitLicense program asks the applications to “extract personal, private information” which significantly compromises any potential platform that has its very core set in security (as cryptocurrencies require the utmost security functions).
CEO of GoCoin, Steve Beauregard, had also shared similar comments, stating that it’s “too overreaching and burdensome, especially for the smaller companies.”
It had been reported by Reuters in 2016 that the process requires $5,000 just for the application to be filed, which does not guarantee a license. It was further explained that an application could consist of more than 500 pages including sensitive information such as executives’ fingerprints. It was also mentioned that on top of all that, regulators also ask additional questions and inquire for more details about the organization.
The process has not changed since then, and that is what is causing all of these companies to either turn away from New York altogether or not to apply for BitLicense in the first place.
Both of these approaches to BitLicense affect the citizens of New York, who either miss out on new jobs and business due to not having modern ventures available within their reach, or can risk losing their investment and jeopardize their career by investing or working with a company that is not licensed under the jurisdiction only because the licensing process was too tiresome.
As it is now going to be three years since the early adaptation of BitLicense, and the cryptocurrency industry has grown to unprecedented levels, it is time for NYDFS to look into improving the procedure so it could process timely applications for more businesses.
If NYDFS decides to improve on BitLicence, then it should also not restrict that approach to new businesses interested to start their operations in New York, but should also offer the existing businesses to operate with full accordance to the improved regulatory law so the people associated with them could continue working without worrying about the uncertain position of their employers.