NYDFS Approves First BitLicense for Operating Bitcoin Teller Machines
Last week the New York State Department of Financial Services (DFS) granted Coinsource, Inc. a BitLicense to operate Bitcoin Teller Machines (BTM) in the state. Coinsource operates 40 Bitcoin kiosks in New York City, Westchester, and Nassau. The touchscreen kiosks allows customers to convert cash to bitcoin, or vice versa, depositing or withdrawing from their mobile wallet.
Upon the press release of the approval on November 1, 2018, Sheffield Clark, CEO of Coinsource stated,
“Coinsource is the first and only company that operates BTMs to receive a New York virtual currency license. All New Yorkers — from the people that are unbanked to the people who own the banks — can use our kiosks in their neighborhood retail locations to buy bitcoin instantly in a convenient and familiar way. Now that Coinsource is a license holder, our customers can buy and sell with confidence that Coinsource meets and exceeds the high standards set by the New York Department of Financial Services. New York represents not just a center of global innovation but also one of our largest target markets. We are extremely proud to be the only BTM operator holding a New York virtual currency license.”
Coinsource Approval Requirements
DFS follows a “comprehensive and rigorous review” of technology based money transmitter applications. Virtual currency licensing applicants undergo a comprehensive review of anti-money laundering, capitalization, consumer protection, and cyber security standards under New York’s money transmitter law banking law, and financial services law. DFS has pushed for responsible growth of New York’s Fintech industry. Various applicants get rejected for their applications, and those granted a Bitlicense are still subject to revocation if they fail to comply with regulations. Coinsource’s application was inspected by examiners and independent consultants to meet regulatory conditions which include:
- Implement, monitor and update effective risk-based controls and appropriate BSA/AML and OFAC controls to prevent money laundering or terrorist financing.
- Implement, monitor and update effective risk-based controls to prevent and respond to any potential or actual wrongful use of Bitcoin, including but not limited to its use in illegal activity, market manipulation, or other similar misconduct, as required by DFS’s February 7, 2018, “Guidance on Prevention of Market Manipulation and Other Wrongful Activity”.
- Compliance with DFS’s transaction monitoring and cybersecurity regulations.
- Maintain policies and procedures for consumer protection and to promptly address and resolve customer complaints.
Financial Services Superintendent Maria T. Vullow reiterated DFS commitment to compliance,
“Today’s approval is a further step in implementing strong regulatory safeguards and effective risk-based controls while encouraging the responsible growth of financial innovation,” said Superintendent Vullo. “New York’s financial services marketplace is thriving with companies committed to complying with DFS’s regulations that ensure the security of transactions, safeguard the industry and protect consumers.”
New York BitLicenses By The Numbers
Coinsource is the ninth (9th) primary institution granted a virtual currency license, or BitLicense, with three others granted a Charter under New York banking law. After a nearly two-year inquiry for regulatory guidelines, the BitLicense regime was introduced in June 2015. Since then the NYDFS granted one BitLicense in the year 2015 to Cirlce Internet Financial, one more in 2016 to XRP II, Inc, and two licenses in the year 2017 to Coinbase, Inc. and bitFlyer USA, Inc. This year has been the most prolific for BitLinces with Genesis Global Trading, Inc., Xapo, Inc., Square, Inc., BitPay, Inc., and now Coinsource, Inc. grated a license in 2018. As for the chartered companies, itBit Trust Company and Gemini Trust Company were granted virtual currency charters in 2015, with itBit now known as Paxos Trust Company approved to exchange Stablecoin in September 2018.