According to a Reuters report, Coinbase and Ripple are very close to being approved for bitcoin licenses by New York’s financial regulator, which would allow the two companies to legally operate within the state.
Ripple & Coinbase Want to Operate in NY
A notice published on the The New York State Department of Financial Services’s (NYDFS) website shows that the state agency received application from both companies on April 28th, 2016. These notices are generally published after cryptocurrency firms have already completed the necessary paperwork — signaling that the licensing process is nearly complete. However, the time-frame for approval is still unknown.
Many are aware of the state’s so-called “BitLicense” regulations for companies dealing cryptocurrencies within New York state. It was probably one of the most controversial Bitcoin-related topics of last year. However, the legislation marked a milestone in Bitcoin history because for the first time a legal apparatus, through actual legislation, had recognized the virtual currency.
BitLicense was first proposed in 2014, and the all of the specific rules and regulations were finalized later on in the summer of 2015. The regulations define virtual currency business activity as any one of the following types: receiving virtual currency for transmission or transmitting virtual currency — except where the transaction is undertaken for non-financial purposes and does not involve the transfer of more than a nominal amount of virtual currency. This also includes storing, holding, or maintaining custody or control of virtual currency on behalf of others, buying and selling virtual currency as a customer business, and performing exchange services as a customer business, or controlling, administering, or issuing a virtual currency.
The following activities are excluded from the definition of virtual currency business:
“Development and dissemination of software in and of itself, and merchants and consumers that utilize virtual currency solely for the purchase or sale of goods or services or for investment purposes.”
If You Can’t Beat ‘Em, Join ‘Em
Many Bitcoin startups and service providers are critical of the BitLicense as they feel New York lawmakers have placed burdensome rules on virtual currency companies. As a result a large amount of them simply left the state in what was called “Great Bitcoin Exodus” rather than apply for the new license.
Interestingly enough, Coinbase was actually one of the companies that was vocal in their disapproval of the new regulations, saying at the time:
IT’S TROUBLING THAT THIS NASCENT INDUSTRY IS BEING SUBJECTED TO MORE ONEROUS REGULATIONS THAN THOSE TYPICALLY APPLIED TO LEGACY FINANCIAL INSTITUTIONS.
Ripple also shared its thoughts at the time through an open letter to the New York’s financial regulator. They were a little more optimistic than Coinbase, but they too expressed their concerns, saying:
The BitLicense Proposal as written creates an uneven playing field between virtual currency businesses and other financial entities, in particular licensed money transmitters.
But despite concerns that the regulations disproportionately hurt smaller businesses at the benefit of larger ones, both Ripple and Coinbase — arguably two of the biggest companies in the space — are still expected to obtain the BitLicense. They will join the ranks of Goldman Sachs funded Circle, in a move that would all but confirm the reality of an “uneven playing field.”
What do you think about Ripple and Coinbase’s application for a Bitcoin license? Let us know in the comments below!
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