The state of New York has granted cryptocurrency license to wallet and vault provider Xapo. This was contained in an announcement made by the New York Department of Financial Services (NYDFS)’s superintendent, Maria T. Vullo, yesterday.
BitLicense one of the toughest license to get
BitLicense is the blockchain and cryptocurrency license granted by the state of New York. The license program, which was designed three years ago, was aimed at providing a legal operational framework for companies who were involved in storing, trading, buying or selling cryptocurrency.
BitLicense was also designed in such a way that would attract cryptocurrency and blockchain companies who are looking to operate within the law. It was intended to push the state of New York to the forefront of the blockchain industry.
However, cryptocurrency companies have looked elsewhere after it became clear to them that to acquire the license was too expensive for most of them not to talk of the rigorous selection process involved in it. This is the reason why cryptocurrency companies are looking elsewhere, with Malta and Switzerland now emerging as the two hottest cryptocurrency destinations in the world.
Since the creation of BitLicense in 2015, hundreds of applications have been submitted to the state of the New York but only five have been approved by the state, with U.S. based Coinbase and Circle among the few recipients.
So far, BitLicense has been considered a failure by industry experts and even others outside the industry. At a roundtable discussion in February, New York state senator Jesse Hamilton while talking about BitLicense stated;
Anyone in the crowd that does not think the BitLicense needs to be reformed?
360 Blockchain President, Jeff Koyen, also commented;
There’s no question that New York’s BitLicense stifled the growth of blockchain and crypto startups. This is a widely held opinion, even among lawmakers. Since it’s unlikely they’ll abolish it altogether, we can hope for reasonable revisions. Even if the application and review process is streamlined—that might be enough to reduce the so-called ‘BitLicense Exodus.’
This has led to calls for a revision of the BitLicense rules, with state senator, David Carlucci, assuring that it would come soon though no one knows when that will happen.
Xapo joins elite list of BitLicense receivers
Xapo has now joined the list of exclusive companies to be granted BitLicense, making it only the sixth company to be granted the license since it was started three years ago. Maria T. Vullo, in her announcement stated that BitLicense is furthering “New York’s continued commitment to creating a thriving, global fintech marketplace” by granting the license to Xapo, which is a Swiss-based bitcoin wallet and cold storage service, provider.
Xapo President, Ted Rogers, reacting to this latest development said;
We are very pleased with the approval of Xapo’s BitLicense application. It is the end result of much hard work, not just by Xapo personnel but by all the DFS and its staff.
This license means that Xapo is now legally entitled to offer services to its users in the state. The company which first started operations in San Francisco had moved its main headquarters to Zug in Switzerland, with the town now known as the “Crypto Valley” after favorable regulations were passed there early last year.
NYDFS, in its statement, further added that the company had gone through a ‘comprehensive review’ with the agency that was tasked with looking to a company’s anti-money laundering, anti-fraud, capitalization, consumer protection and cybersecurity policies. The agency, however, noted that the license granted to Xapo is subject to “ongoing supervision by DFS”.
In addition to this, the agency had approved the request of cryptocurrency exchange itBit, formerly known as Paxos, to add four new cryptocurrencies to its platform, with Ether, Litecoin, Bitcoin Cash and Stellar Lumens the digital currencies approved.
Paxos doesn’t operate with a BitLicense as it was instead given a virtual currency charter under New York Banking Law three years ago. Another cryptocurrency that was given the license to operate with a charter in the state is Gemini.
Genesis Global Trading was the last to receive BitLicense
BitLicense was last given to Genesis Global Trading. The company received the license to operate in New York State last month, with the company known for offering large trades with institutional investors.
NYDFS allowed the company to trade Bitcoin, Ether, Ethereum Classic, Bitcoin Cash, XRP, Litecoin, and Zcash. Michael Moro, chief executive officer of Genesis, had stated;
Although we have operated under a safe harbor provision in recent years, today’s decision is an important step forward and reaffirms the robust compliance measures we have enacted as an established trading partner.
Whether the approval of Xapo would lead to more companies applying for BitLicense is still unknown but one thing is for sure, BitLicense needs to be reviewed and amended if New York is to compete with the new hot spots like Zug and Malta.