The New York State Department of Financial Services (NYDFS) yesterday announced the creation of a new division for licensing crypto-businesses.
The ‘Research and Innovation’ Division will supervise and license virtual currencies, address financial inclusion through technology, protect consumer data rights, and encourage innovation in the financial services marketplace.
A New ‘BitLicense’ Division
Four years ago, NYDFS introduced the notorious BitLicense, for crypto companies wishing to partake in ‘virtual currency activities’. Since its introduction, only a relative handful of cryptocurrency businesses have gained one.
Many believed the requirements for a BitLicense to be unnecessarily strict, causing some to cease trading in the state. Its terms were considered too onerous and damaging to innovation, and it became the yardstick by which other disruptive legislation was measured.
With this new division, NYDFS has addressed the need for these applications to be dealt with by a dedicated team.
The ‘Regulatory Landscape Needs To Evolve’
In announcing the new division, Superintendent Linda Lacewell stressed the need for the crypto regulatory landscape to evolve and adapt as innovation continues to grow.
This new division… position[s] DFS as the regulator of the future, allowing the Department to better protect consumers, develop best practices, and analyze market data to strengthen New York’s standing as the center of financial innovation.
Hopefully, another benefit of having a dedicated division to oversee cryptocurrencies will be to expedite the BitLicense application process.
How This Affects Bakkt
As Bitcoinist reported yesterday, Bakkt began User Acceptance Testing of its Bitcoin Futures products on Monday. Though this was purportedly ‘on schedule’, Bakkt has seen many delays prior to this, awaiting regulatory approval.
Despite gaining CFTC approval by default (lack of disapproval), it still has approval from one regulatory authority to attain. Bakkt needs to become a qualified custodian in order to fully launch its futures products, and this lies in the hands of the NYDFS.
Bakkt will certainly hope that this new division helps to expedite the process, as it has already been in application for several months.
Interestingly, NYDFS has previously issued a BitLicense to a company for custodial services, back in November last year.
Perhaps Bakkt’s Bitcoin futures products could launch sooner than we think?
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