NY Regulator Releases Proposed Changes to Streamline BitLicense

New York State Department of Financial Services (NYDFS) Superintendent Linda Lacewell on Wednesday released the final proposal for amending the BitLicense regulations, which mainly concern easing the listing of new crypto coins.

The NYDFS, which recently issued its 24^th BitLicense to the online lending start-up SoFi, proposes two revisions giving the public and interested parties time to comment until January 27, 2020.

The first suggestion is “a proposed DFS web-page” that contains a list of all permitted coins that a licensed firm is allowed to offer to its clients without prior approval by the NYDFS. This list could be updated from time to time "as long as such listed coins have not been subject to any modification, division, or change after their listing on the DFS web-page."

The second proposal introduces a framework "for a coin-listing or adoption policy that can be tailored to a VC licensee‘s specific business model and risk profile to create a firm specific coin listing or adoption policy (a 'company coin-listing policy') that, if approved by DFS, will enable the licensee to self-certify the listing or adoption of new coins (...) without DFS’s prior approval."

Once a BitLicense holder’s coin-listing policy is approved by DFS, they will be able to self-certify to DFS that its proposed adoption or listing of new coins comply with the requirements of its DFS-approved company coin-listing policy. They will also have to provide written notice to DFS, informing the watchdog of their intent to offer and use any such new coins. This notice must include details of the usage and offering of such coins, prior to using or offering them.

Less red tape

Meanwhile, BitLicense holders that do not have a pre-approved coin policy must get DFS’s prior approval for any coin that is not yet listed on the DFS web-page of permitted coins.

The DFS says it wants to find a reasonable balance between protecting consumers and allowing innovators to develop without unnecessary red tape and restrictions.

"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," Lacewell 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?"

“This is an important first step in our review of our virtual currency regime and is designed to make it easier for those who have obtained a New York license to periodically add new coins to their existing products,” Lacewell added.

Comments related to the proposed guidance should be submitted by January 27, 2020, to innovation@dfs.ny.gov with the subject line: “Proposed Coin Listing Policy Framework.” Thereafter, DFS will release final guidance.