DFS Virtual Currency Initiatives

New York State Department of Financial Services (DFS) Superintendent Linda A. Lacewell announced earlier this week that the DFS and State University of New York (SUNY) have signed a Memorandum of Understanding (MOU) expressing their intent to launch a new SUNY-related virtual currency program, “SUNY BLOCK.” Once licensed by DFS, SUNY BLOCK will be able to support nascent virtual currency entities from local communities, including those started or run by students or alumni. 

The MOU states that DFS and SUNY “intend to cooperate with the aim of encouraging and enabling responsible innovation with respect to financial technology (“FinTech”), including but not limited to virtual currency-related innovation, in and throughout New York.”

“This MOU with SUNY is a strategic step to diversify and deepen the next wave of innovators in the virtual currency space in New York,” said Lacewell in an announcement. She added the decision would “will boost responsible innovation and help get New York’s economy back on its feet. “ 

SUNY Chancellor Kristina M. Johnson added, “SUNY’s partnership with DFS further builds on Governor Andrew Cuomo’s efforts to boost New York’s economy by creating new opportunities within our high-tech industries. Innovation is essential, and a key component is collaborating with SUNY’s campuses to develop the next-generation of developers, researchers, and leaders.” 

This agreement will help expand the state’s virtual currency ecosystem to new geographies and demographics, and support Governor Andrew Cuomo’s efforts to foster an innovative New York economy and help New York build back better and stronger from the impacts of the COVID-19 pandemic. Startups and emerging companies participating in the SUNY BLOCK program will be able to apply for a conditional license from DFS. This, according to DFS, will help foster and diversify research opportunities and innovation emerging from SUNY faculty, staff, students and alumni and the startups they create. 

The MOU is just one such potential application of a new proposal by DFS to utilize its conditional licensing authority for the first time. Under the proposed conditional licensing framework, entities may apply for a conditional license when partnering with an existing entity authorized by DFS to engage in virtual currency business activity. The existing licensee would provide the conditional licensee with the operational, staffing and other support the conditional licensee may need until it can obtain a full DFS virtual currency license or limited purpose trust charter on its own. More about this initiative will likely be available in mid-August.

The steps announced on June 24 come five years after the introduction of New York’s virtual currency license and are the result of outreach to industry and other experts in the field.

DFS is also issuing additional resources, including a notice of DFS practices aimed at creating a more transparent and timely process for the evaluation of virtual currency license applications and new virtual currency-related Frequently Asked Questions (FAQs) that address questions identified through discussions with current and prospective market participants. 

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