January 21, 2022

Volume XII, Number 21

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An Empire State Glimmer of Hope for Crypto

It’s no secret that accessing the New York market is difficult, if not impossible, for some digital asset companies, especially those in their early stages.  New York’s Department of Financial Services (“DFS”) is hoping to change that—at least incrementally—with several initiatives it recently announced.  Our digital asset team will soon provide a detailed analysis of the initiatives, but in the meantime here is a brief summary:

  • Notice of License Application Procedures: Acknowledging that it “has heard concerns among BitLicense applicants regarding the duration of, and level of transparency in, the BitLicense application review process,” DFS announced two new practices: limiting the substantive review to only applications ready for such review; and limiting the number of deficiency letters for a given set of requirements.

  • Proposed Conditional BitLicense: DFS is seeking comments by August 10 on a proposed framework through which an entity seeking a BitLicense can collaborate with a current licensee (or holder of a New York limited purpose trust charter) for various services and support so that the applicant can begin offering its services in New York before obtaining its own BitLicense.

  • FAQs: Twenty-one new FAQs have been posted on DFS’ website.  They range from general questions, such as “Who needs a BitLicense,” to more specific questions like “Are ‘stablecoins’ considered Virtual Currencies under the BitLicense regulation”?  (Cliff’s Notes on the latter question: many are.)

  • Finalized Coin Listing Framework: DFS finalized the framework that a digital asset company should use to develop a coin listing policy.  Once that policy is approved by DFS, in order to offer or use a new coin, the company need only notify DFS that the coin complied with the company’s policy.  It would not need to obtain separate DFS approval.

Copyright 2022 K & L GatesNational Law Review, Volume X, Number 179
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About this Author

Associate

Jeremy McLaughlin is an associate in the firm’s San Francisco office and a member of the Consumer Financial Service group. His practice focuses principally on regulatory compliance and government enforcement for Fintech and consumer financial products and services, with particular attention on emerging payments and compliance with state and federal consumer protection laws, state money transmitter licensing laws, and international remittances, as well as advising on privacy, data security, and PCI compliance. He represents and advises financial technology companies,...

415-882-8230
Daniel Cohen, KL Gates Law Firm, Washington DC, Finance Law Attorney
Associate

Dan Nuñez Cohen is an associate in the firm's Washington, D.C. office. Dan advises and advocates for clients at the intersection of federal legislative and regulatory policy and compliance, focusing on financial services issues affecting depository institutions, trust companies, money services businesses including digital asset exchanges, wallet providers, and token issuers; and the cannabis industry. He has experience assisting with bank charters and money transmitter licenses; counseling clients on compliance with federal banking and trust laws; and advocating for...

202-778-9020
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