New York State, the Empire State. Its State Motto is Excelsior, Latin for ever upward. New York City, the financial capitol of the World. Well I say bulls**t!!! I can't even use Binance US as I supposedly live in a prohibited jurisdiction. Being a crypto hodler and trader in good old New York is just, well, I'll be kind - DAMN HARD!
Why is this so you may ask?
The answer lies in voting politics. You see, more than 50% of the voters in this wonderful state keep on electing moronic idiots who enact such stupid legislation as BitLicense. And unfortunately this situation is unlikely to change until the cryptocurrency enthusiasts represent in excess of 50% of the voting base.
Now, what is BitLicense? Almost six years after the genesis block of Bitcoin (2015), the New York State Department of Financial Services woke up and noticed cryptocurrency businesses in the State and codified a regulation entitled "BitLicense" [New York State Register, Vol. XXXVI, Issue 23 (July 23, 2014), pp. 14-16. Rulemaking I.D. No.DFS-29-14-00015-P] . So, starting in June of 2015, cryptocurrency businesses were required to obtain NYDFS approval under "BitLicense" if they engaged in any of the following activities:
- transmitting virtual currency
- storing or holding in custody virtual currency
- buying and selling virtual currency
- operating a trading exchange for virtual currency
- issuing virtual currency
A "BitLicense" is not required for the following activities:
- businesses engaged solely in the mining of virtual currencies
- businesses that accept virtual currencies as payment for goods and services
Cryptocurrency regulations in New York impose a number of further requirements that cryptocurrency businesses must meet on an ongoing basis. These requirements include consumer protections, cybersecurity, Know Your Customer (KYC), and Anti Money Laundering rules (AML). In addition to these requirements only pre-approved cryptocurrencies ("greenlisted") fall within the parameters of the "BitLicense". As of the fourth quarter of 2020, the "greenlisted" cryptocurrencies are as follows:
Cryptocurrencies approved for listing:
- Binance USD (BUSD)
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- Gemini Dollar (GUSD)
- Litecoin (LTC)
- Pax Gold (PAXG)
- Paxos Standard (PAX)
Cryptocurrencies approved for custody
- All the cryptocurrencies approved for listing
- Ethereum Classic (ETC)
- Ripple (XRP)
With the adoption and approval of these regulations in 2015, many of the cryptocurrency businesses doing business in New York State found the requirements overly expensive, onerous, and difficult. The adoption of these regulations led to the "Great Bitcoin Exodus"[Michael del Castillo (August 12, 2015), "The Great Bitcoin Exodus' has totally changed New York's bitcoin ecosystem", New York Business Journal] where at least 10 companies decided to stop serving New York customers (e.g. Kraken, Shapeshift, etc.). However, over the past several years, the number of companies that obtained a "BitLicense" has somewhat increased. As of the fourth quarter of 2020, the following companies are "BitLicense" approved:
- Bitflyer
- Bitstamp USA Inc.
- Circle Internet Financial Inc.
- Coinbase Inc.
- Coinsource
- Cottonwood Vending
- Eris Clearing, LLC
- Genesis Global Trading, Inc.
- LibertyX/Moon Inc.
- NYDIG Execution LLC
- PayPal (conditional in partnership with Paxos Trust Company LLC)
- Robinhood Crypto
- Seed Digital Commodity Market, LLC
- SoFi Digital Assets
- Square, Inc.
- Tagomi Trading
- Xapo, Inc.
- XRP II LLC (Ripple)
- Zero Hash LLC
There are several other companies offering cryptocurrency services in New York operating under a "Limited Purpose Trust Charter" (LPTC). These LPTCs have additional statutory requirements necessitating application to the New York Banking Board. The LPTCs possess fiduciary powers that permit the management of customer's assets. These LPTCs are:
- Bakkt Trust Company
- Coinbase Custody Trust
- Fidelity Digital Asset Services, LLC
- Gemini Trust Company, LLC
- NYDIG Trust d.b.a. Stoneridge
- Paxos Trust Company, LLC
CONCLUSION:
It is without doubt that the State of New York has created a hostile environment for cryptocurrency companies. The statutory requirements are burdensome and expensive thereby creating disincentives for cryptocurrency companies to even want to conduct business in the state. It is truly sad that given the expansive state of the cryptocurrency industry worldwide, that New York, the financial capitol of the world, can attract so few cryptocurrency businesses. Maybe the lawmakers are giving into special interests, i.e. the banking industry. Maybe the lawmakers just don't understand the cryptocurrency industry. Who knows the reasons, but the restrictive policies toward the cryptocurrency industry continues in the State of New York.
So, living in New York, those of us engaging in cryptocurrency must continuously work around the State's draconian regulations. Sure, us New Yorkers still invest in cryptocurrencies, daily. But many times we are forced to look at various alternatives or find back doors to work against the restrictions. Yup, investing in cryptocurrencies in New York is damn hard! But we all persevere.
Please note that this conclusion is merely one man's opinion and should not be deemed financial advice of any fashion.
I am merely an ordinary small investor who likes to share what I've learned and found interesting. Please take a few minutes and check out my other published articles. I am not in any way a financial advisor and as such, do your own research before investing. If you enjoyed this article please like it, comment and/or tip. Feedback is always welcome here.