New York Regulator NYDFS Rejects Bittrex BitLicense Application
The New York Department of Financial Services (NYDFS) has rejected an application by the Bittrex crypto exchange for the regulator’s BitLicense.
The NYDFS apparently sent a letter to the exchange’s CEO Bill Shihara detailing the reasons for the rejection on April 10.
According to the letter, the New York state regulator cited Bittrex’s inadequate policies and safeguards relating to Anti-Money Laundering (AML) checks, Know-Your-Customer (KYC) procedures, coin listing processes, and the Office of Foreign Assets Control (OFAC) standards.
Bittrex submitted an application for the state’s BitLicense in 2015, with the license introduced the same year, and is mandatory for all businesses seeking to offer virtual currency-related services in the state of New York.
Since then, the Seattle-based crypto exchange has offered its services under what the regulator termed as a “safe harbor,” which allowed the NYDFS to review the exchange’s application.
The NYDFS reportedly issued numerous compliance letters to the exchange, detailing certain “deficiencies” it wanted Bittrex to address.
The letters were also meant to help the exchange develop “appropriate controls and compliance programs,” which the regulator noted should have corresponded to the rapidly evolving crypto sector.
However, it appears these concerns have not been adequately addressed by the Bittrex team.
The NYDFS has therefore asked the exchange to end its business operations across the state of New York, giving it up to April 11 to comply with the order.
Additionally, Bittrex will have to write to the regulator within 14 days to confirm that the crypto platform has ceased all operations as asked.
Bittrex also has up to 60 days within which to complete the transfer of whatever assets they may have in custody on behalf of New York residents. The exchange is also expected to use that time to re-allocate trading positions.
Understandably, the NYDFS application procedure leaves no room for an appeal in case of rejection, meaning that Bittrex may have to tender a fresh application if it wishes to get the BitLicense.
Just this week, NYDFS granted crypto exchange BitStamp the license, with the U.K.-based platform becoming the 19th firm to receive the regulator’s approval.
The rejection of Bittrex’s application for the virtual currency license also comes at a time when U.S. lawmakers have just reintroduced the Token Taxonomy Act in Congress seeking to promote innovation within the crypto industry.
The crypto-friendly legislators have also gone on to identify a number of digital currency policies that could hinder the space. For instance, they termed New York’s licensing as an arduous and heavy-handed procedure.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.