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New York regulator publishes proposed guidance to modify BitLicense

Thu, 12 Dec 2019, 10:18 am UTC

The New York Department of Financial Services (NYDFS) has officially announced that it is reviewing its virtual currency regulations.

The regulator on Wednesday published proposed guidance that seeks to modify the approval process for new coin listings. NYDFS Superintendent Linda Lacewell said that this marks the first step in DFS’s review of New York’s BitLicense to respond to changes in the marketplace over the past four years.

CoinDesk reported that the NYDFS currently follows a case-by-case approach for approving every cryptocurrency offered in the Empire State by individual exchanges.

The proposed guidance aims to change this with two particular updates – the coins approved by the NYDFS for listing in New York can be listed by any exchange operating in the state provided they notify the regulator; and the NYDFS will publish a model framework for coin listings that can be tailored to a particular exchange’s business model and risk profile.

The NYDFS said that the coins currently contemplated for the list of approved coins include Bitcoin, Bitcoin Cash, Ether, Ether Classic, Litecoin, Ripple, Paxos Standard, and Gemini Dollar.

The regulator further highlighted the attributes that should be included in a company’s coin-listing policy. This includes governance, risk assessment, and monitoring to ensure that the firm’s continued adoption or listing of the coin remains prudent. Existing licensees would not be required to re-apply, Lacewell was quoted saying by CoinDesk.

"The idea being that you already have a license, you already have passed muster and have the controls in place, you are subject to examination by us," she said. "And we've approved a lot of coins since the early days so can [we] cut through the red tape and can we get to a place where responsible licensed companies can self-certify under appropriate guidance that we're putting forward?"

Comments on the proposed guidance could be submitted no later than Jan. 27, 2020.

Since the NYDFS’ virtual currency regulatory framework or BitLicense came into effect in 2015, the regulator has granted the license to a total of 24 firms so far, including crypto exchanges, bitcoin teller machine providers and other firms. However, the stringent regulations have also forced some crypto firms, including Kraken and ShapeShift, out of the state.

Previously in July, the NYDFS launched a new division that will be responsible for regulating and licensing crypto-related businesses. The new Research and Innovation Division will “house the Department’s division responsible for licensing and supervising virtual currencies, and it will assess new efforts to use technology to address financial exclusion.”

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