A BitLicense is a regulatory standard overseen by the New York State Department of Financial Services. This regulatory standard specifically targets cryptocurrency and its associated businesses. First brought into effect in 2015, BitLicense’s are an extremely contentious issue with the cryptocurrency community.
Officially the financial regulatory body of New York issued the new regulatory standard that required cryptocurrency businesses and traders to have this state-issued license. This license was not only difficult to procure, but also extremely expensive. In some cases running up $100,000 to procure.
This license has a very broad authority over businesses operating in New York, encompassing crypto transmission, crypto exchange, and well as the movement of crypto assets. Adding to the already controversial nature of the license, it also requires entities that engage with crypto businesses that are stationed in New York to also require the license.
BitLicense is very unpopular within the crypto community, with many citing it as a blatant overstep of regulatory agencies’ increasing desire to control the crypto market. In a sense, BitLicense has become a representation of a greater authoritative need for control on the part of regulatory bodies but is yet anittehtical to the principles that underpin the cryptocurrency.
Given the nature and difficulty to procure BitLicense, regulators within New York have sought to relax, what many consider to be almost punitive restrictions on cryptocurrency businesses. As due to those restrictions, many such crypto businesses have simply left New York for more hospitable environments.
One such increasingly hospitable environment that New York could learn from is Wyoming. In a rather short space of time, Wyoming has passed 24 Bills that positively encourage the development of the blockchain industry and its associated technology. These bills allow for a considerably streamlined approval rate for would-be crypto banks.
Unsurprisingly, this welcoming environment has proven attractive for crypto investors, with Kraken placing investments into the state. As such other states have also begun to show signs of increasing crypto hospitality. With states include Texas, Illinois, and Nebraska all passing their own favorable cryptocurrency bills. Thus creating a level of regulatory competition between states, that may well indicate increasingly greener pastures for crypto businesses.