The New York Department of Financial Services has announced that they are granting a virtual currency license to Genesis Global Trading Inc. This is only the 5th BitLicense ever to be granted in the state of New York since the law requiring the license was put into effect in August 2015.
The license was granted after the Department of Financial Services reviewed Genesis Global Trading’s anti-money laundering, anti-fraud, capitalization, consumer protection, and cybersecurity policies. According to the Superintendent of Financial Services, Maria T. Vullo, this is done in order to protect consumers and investors.
Genesis Global Trading offers cryptocurrency investment services to institutional investors and is located in New York City. Now that they have the Bit-License they are in a prime position to offer services to Wall Street firms.
Circle was granted a Bit-License in 2015, Ripple in 2016, Coinbase in 2017, and bitFlyer in 2017. The five companies that have the license are the only organizations that are allowed to buy, sell, or exchange cryptocurrency as a business in the state of New York. Many more applications have been denied, the license is very hard to obtain, requiring lots of money and lawyers to maneuver a tremendous amount of red tape.
Essentially, the BitLicense has forced individual cryptocurrency dealers and most companies to either leave New York or break the law and conduct their business under the radar. Only the richest companies can afford to go through the process of getting the license, the non-refundable fee just to get the application started is $5000, and if successful an undisclosed amount of capital must be kept on hand to maintain financial integrity.
When the BitLicense was first enacted at least ten major cryptocurrency companies shuttered their doors to New York customers, and some people have called this the Great Bitcoin Exodus. The New York BitLicense required disclosing all customer information, completely getting rid of anonymity.
One of the main reasons people use cryptocurrency is to remain anonymous when sending money, and the BitLicense defeats this purpose. This is probably why most companies, even the ones that can afford the money and lawyers needing to get the license, have decided to leave New York. It can be quite damaging to a cryptocurrency company’s reputation if they are disclosing customer info directly to the government like the BitLicense requires.
The New York Bit-License has come under intense scrutiny from cryptocurrency entrepreneurs. ShapeShift CEO Erik Voorhees has stated that the law is an absolute failure, that it is pathetic, and it should be removed.
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