New York State Department of Financial Services grants BitLicense to Coinsource, but not without criticism
Fort Worth, Texas-based bitcoin ATM provider Coinsource has received its BitLicense from the New York State Departmentof Financial Services (NYDFS), the company said Thursday.
Coinsource becomes the first virtual currency ATM provider to be granted the license and the 12th company overall toreceive the stamp of approval from the state regulator, the company said.
"All New Yorkers -- from the people that are unbanked to the people who own the banks -- can use our kiosks in theirneighborhood retail locations to buy bitcoin instantly in a convenient and familiar way," said Sheffield Clark, CEO ofCoinsource in a press release.
New York became the first state to carve out a crypto-specific regulatory framework for the nascent industry when theBitLicense -- a business license for virtual currencies -- came into effect in 2015.
"Today's approval is a further step in implementing strong regulatory safeguards and effective risk-based controlswhile encouraging the responsible growth of financial innovation," said Maria Vullo, DFS Superintendent.
However, the license has drawn a raft of criticism from some industry participants. When it was introduced, twoexchanges -- Kraken and ShapeShift -- pulled operations from New York state citing its arduous and costly process.
Furthermore, others have argued that the DFS is part of a dysfunctional regulatory system that lacks coordination withother bodies. In a Sept. 20 interview with MarketWatch, David Yermack, professor at New York University, who teachesblockchain and cryptocurrency-related courses said: "There are a lot of weaknesses in the U.S. [regulatory] system,including high cost, regulatory arbitrage and competition among agencies for control of turf. Crypto seems to be a goodmanifestation of these problems, but it is neither the first nor the last."
Read:Is the piecemeal approach to crypto oversight creating regulatory arbitrage? (http://www.marketwatch.com/story/is-the-piecemeal-approach-to-crypto-oversight-creating-regulatory-arbitrage-2018-09-20)
But for Coinsource, it hopes the license will legitimize the physical teller industry for bitcoin, the world's mostpopular cryptocurrency.
"We only hope that this milestone brings further validation to the BTM (Bitcoin Teller Machines) industry. It provesthat regulators will reward entrepreneurs who combine innovation with a willingness to meet best practices andcompliance standards," said Clark.
Coinsource operates more than 200 machines in 19 states.
Read:Winklevoss twins' Gemini Trust launches world's first regulated stablecoin (http://www.marketwatch.com/story/winklevoss-twins-gemini-trust-launches-worlds-first-regulated-stablecoin-2018-09-10)
-Aaron Hankin; 415-439-6400; AskNewswires@dowjones.com