New York Department of Financial Services (NYDFS) is making moves to simplify the rules needed for crypto exchanges and businesses to run across the state.

What is BitLicense? 

NYDFS is the regulatory body in New York, responsible for regulating financial services and products. Essentially, they had introduced the BitLicense framework back in 2015 to analyze the activities of virtual currencies across the state. This framework is mandatory for any crypto-related businesses that are aiming to run in the state. Once they register and have completed the required evaluation, they would be given a license to operate across the state. Businesses will also be given a permit to work in conjunction with other digital asset exchanges in and outside the state.

NY Regulator Lightens up on BitLicense

However, stringent measures and penalties face exchanges that are not registered and they risk a jail term if they are found out. The license certainly has several requisites that made it troublesome for new businesses to obtain.

According to the recent statement by the NYDFS, they perceived that firms across the state couldn't register to get a license because of what they perceived as hurdles in the registration process. That being said, NYDFS is planning to lighten the regulatory requirement;

"New York’s proposed framework would allow companies that want to engage in virtual currency business activity in the state to obtain a conditional license, through which they would collaborate with fully licensed companies," NYDFS said.

What is NYDFS's Conditional BitLicense?

The conditional license is a framework that will enable new companies to collaborate with the authorize BitLicensee.

Who Can Apply for Conditional BitLicense? 

This can be available for a variety of entities, the regulator said, naming 'startups, growth-stage companies, and established NY companies that are not running any business related to virtual currency and the virtual companies operating outside of the New York. 

How Can Businesses Apply for Conditional BitLicense? 

There are two ways;

Companies can either partner with businesses that have been granted a BitLicense or

They can partner with the State University of New York's (SUNY) 64 campuses. For your information, NYDFS has signed a Memorandum of Understanding (MoU) with the SUNY - this partnership allows any individual or business to test their project (related to digital asset and blockchain) under the campuses/school's supervision. If the project turned out to be useful, companies will have the opportunity to claim 'conditional BitLicense".

How Long Conditional License be valid? 

According to NYDFS Superintendent Linda Lacewell, the conditional license will last for two years unless "convert it to a permanent license or unless for some reason it’s not working out.” 

However, the regulator is looking to receive feedback from all interested parties and the general public regarding the frameworks set for conditional BitLicense. With the general public already notified that their inputs are needed, they must now give their opinions on the move before the deadline which was set on August 10.

Relaxed regulations to have a good impact on New York

Since the inception of the BitLicense, exchanges have been forced out of the state, with most of them lamenting on the fees and the time taken to obtain the permit. Out of all the crypto exchanges in the state, only 25 could afford to complete the process and gain their permit. Now that the attention of the regulatory body has been called to the dwindling number of exchanges across the state, they have made moves to grant businesses a conditional BitLicense permit to operate. Now that the conditional permit holds as much power ad the full-time permit, exchanges are expected to take advantage of the opportunity to register and return to the state. 

According to the proposal of the previous BitLicense regulation, Benjamin Lawsky, he was aiming to use the regulations to put New York in front of its peers when crypto regulation is concerned. Over the years, the majority of the big personalities across New York have criticized Lawsky's attempt to bring crypto regulation to the limelight, calling it a bad move. Talking on Lawsky's insistence that countries will adopt his regulations, Caitlin Long, a blockchain consultant said, “Nobody copied the BitLicense, So that says a lot.”

The regulatory board has chosen to review the previous modalities for getting the permit and have amended it in a bid to woo back crypto exchanges into the state. The new conditional permit would further drive the adoption of crypto across the state. If it is anything of comfort to the population of New York, they would begin to trade crypto with ease as a result of more crypto exchanges coming into the state.

Final thought - Before relaxing the previous regulations and taking up a relatively easy one, new York might once again witness an influx of firms, and in the coming weeks, they would be competing to be back into the charts of states with the highest trade volume.