DFS Considering Review of BitLicense

October 24, 2019

New York State’s top financial regulator, the New York State Department of Financial Services (“DFS”), is considering a re-assessment of the virtual currency business activity regulation (commonly referred to as the BitLicense). According to comments made by DFS Superintendent Linda Lacewell at the DC Fintech Week conference, the agency is considering reviewing how the BitLicense regulatory regime fits into the current market and whether any adjustments should be made.

Notably, the final version of the BitLicense regulation was formally implemented in 2015, and since then, the cryptocurrency market has significantly evolved. DFS Superintendent Lacewell noted that the growth and change in the cryptocurrency industry warranted a review of the regulatory regime, but did not go into specific details regarding what exactly that review would encompass or whether any particular changes would be made.

It is highly unlikely that DFS will repeal the BitLicense or significantly curb its requirements such as anti-money laundering, cybersecurity, or consumer protections. However, it is possible that DFS will ease the application process, including the burden placed on start-up applicants. In short, we will continue to closely follow developments in this space and will report on any further developments.