NY DFS Issues Another BitLicense

Recent reports are that the New York State Department of Financial Services issued a BitLicense to Xapo, Inc. and authorized Paxos Trust Company LLC to offer exchange and custody services for emerging cryptocurrencies on its virtual currency exchange.

The press release can be seen, here.

DFS is now reporting that, subject to ongoing supervision, it has approved the virtual currency license application of Square, Inc.

“DFS is pleased to approve Square’s application and welcomes them to New York’s expanding and well-regulated virtual currency market,” said Superintendent Mario T. Vullo. “DFS continues to work in support of a vibrant and competitive virtual currency market that connects and empowers New Yorkers in a global marketplace while ensuring strong state-regulatory oversight is in place.”

According to DFS, it conducted a comprehensive review of Square’s application, including the company’s anti-money laundering, anti-fraud, capitalization, consumer protection, and cybersecurity policies.

“We are thrilled to now provide New Yorkers with Cash App’s quick and simple way to buy and sell bitcoin,” said Brian Grassadonia, Head of Cash App. “Square and the New York State DFS share a vision of empowering people with greater access to the financial system and today’s news is an important step in realizing that goal.”

Square provides tools that help sellers to accept credit card and contactless payments, and assists with inventory management, analytics and financing. The Cash App provides customers with access to various financial services, including buying and selling Bitcoin.

Despite New York’s reputation for imposing heavy regulatory requirements on cryptocurrency businesses since instituting the BitLicense in 2015, DFS has now approved nine firms for virtual currency charters or licenses. It has also granted licenses to Xapo, Inc., Genesis Global Trading Inc., bitFlyer USA, Coinbase Inc., XRP II and Circle Internet Financial, and charters to Gemini Trust Company and Paxos.

Square began offering Bitcoin trading on its Cash App at the beginning of 2018. New York residents, however, were unable to use the platform due to regulations pertaining to the use of cryptocurrency.

New York continues to be one of the most aggressive states in the regulation of cryptocurrencies. The federal government continues to make moves to regulate digital coins.

Shares of Square rallied following the news to close at $66.20. The stock is up significantly this year. Bitcoin spiked following the news, as well.

New York’s Department of Financial Services granted Square a virtual currency license, allowing users of the Cash app in the state to trade bitcoin.

Cash has 7 million monthly active users, the company said in its first quarter earnings call.

Richard B. Newman is a NYC DCA defense lawyer at Hinch Newman LLP.  Email him at rnewman@hinchnewman.com. 

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