The Distributed Ledger: Blockchain, Digital Assets and Smart Contracts - JDSupra | The MarTech Alert |
On June 24, 2020, the New York State Department of Financial Services (DFS) announced a set of policies and proposals to clarify and streamline the regulatory landscape for virtual currency entities doing business within the state. These initiatives all relate to the licensing framework DFS established in June 2015 in anticipation of a proliferation of blockchain technology and virtual currencies, 23 NYCRR Part 200 (the 2015 Licensing Regime). The licensure and compliance requirements imposed by the 2015 Licensing Regime caused the BitLicense — the business license issued by DFS under the 2015 Licensing Regime permitting companies to engage in virtual currency activities — to be viewed as an indication of quality and security. At the same time, the standards and procedures under the 2015 Licensing Regime have been widely criticized as expensive, time-consuming and onerous, and have caused a number of virtual currency business to cease either their operations or plans to operate within New York.

The Self-Certification Policy allows a BitLicensee to create an internal virtual currency-listing policy through which it can self-certify the use of new virtual currencies (in addition to those permitted under the Greenlist Policy) without obtaining case-by-case approval from DFS. Prior to listing new virtual currencies through an internal coin-listing policy, a BitLicensee must obtain DFS approval that the policy meets certain criteria to protect consumer welfare.