An Empire State Glimmer of Hope for Crypto

By: Jeremy McLaughlin and Daniel Cohen

It’s no secret that accessing the New York market is difficult, if not impossible, for some digital asset companies, especially those in their early stages.  New York’s Department of Financial Services (“DFS”) is hoping to change that—at least incrementally—with several initiatives it recently announced.  Our digital asset team will soon provide a detailed analysis of the initiatives, but in the meantime here is a brief summary:

• Notice of License Application Procedures: Acknowledging that it “has heard concerns among BitLicense applicants regarding the duration of, and level of transparency in, the BitLicense application review process,” DFS announced two new practices: limiting the substantive review to only applications ready for such review; and limiting the number of deficiency letters for a given set of requirements.
• Proposed Conditional BitLicense: DFS is seeking comments by August 10 on a proposed framework through which an entity seeking a BitLicense can collaborate with a current licensee (or holder of a New York limited purpose trust charter) for various services and support so that the applicant can begin offering its services in New York before obtaining its own BitLicense.
• FAQs: Twenty-one new FAQs have been posted on DFS’ website.  They range from general questions, such as “Who needs a BitLicense,” to more specific questions like “Are ‘stablecoins’ considered Virtual Currencies under the BitLicense regulation”?  (Cliff’s Notes on the latter question: many are.)
• Finalized Coin Listing Framework: DFS finalized the framework that a digital asset company should use to develop a coin listing policy.  Once that policy is approved by DFS, in order to offer or use a new coin, the company need only notify DFS that the coin complied with the company’s policy.  It would not need to obtain separate DFS approval.