New York State is known in the crypto ecosystem for its famous BitLicense. This license needed by crypto companies might well evolve to bring more flexibility.
Created in 2015, the crypto BitLicense is a license issued by the NYDFS (New York Department of Financial Services) dedicated to cryptos companies. It is mandatory for companies that want to receive, store, transmit or exchange cryptographic data. In other words, it is mandatory for all crypto companies wanting to operate in the state.
Unfortunately, the latter is extremely complicated to obtain. Indeed, only 25 companies have been awarded BitLicense in 5 years. For example, we find the Circle or Robinhood companies.
Conditional Crypto BitLicense
As we saw in the introduction, BitLicense aims to be “softened”. Thus, the NYDFS recently announced the creation of a conditional BitLicense.
This can be issued to any crypto company that works in partnership with a company that has already received BitLicense. The purpose of the conditional BitLicense will be to help companies to eventually obtain the BitLicense by accompanying them.
“DFS expects that an entity seeking a conditional license will strive to seek and obtain a full BitLicense,” the announcement states.
In order to receive it, crypto companies will need to indicate their intention to work with a current BitLicense holder, as well as draft an agreement between the two companies. Afterwards, all documents must be submitted to and approved by the NYDFS.
Once validated, a list of recommendations will be issued and must be respected by the company. Otherwise, the NYDFS reserves the right to terminate the conditional license.
This is great news for crypto companies wishing to base their business in New York State. Indeed, it gives them the possibility to operate even before receiving BitLicense, as well as to show the regulators a blank slate in the hope of one day receiving it.