In June 2015, New York officially adopted BitLicense, a framework of regulations aimed at digital currency companies that either do business in New York State or do business with New York State residents. New York is the first state in the U.S. to impose such regulations. August 8, 2015, was the deadline for such digital currency companies to apply for BitLicense.
Instead of applying, many reputable digital currency platforms have left New York. A long list of digital currency companies are no longer available in New York, including Bitfinex, Kraken, Paxful, BitQuick, GoCoin, and Shapeshift.
Amid a current of outgoing companies, one digital currency company is staying put. Bitstamp was the first digital currency platform to announce that they would be applying for BitLicense.
Does Bitstamp feel that remaining in New York will give them an edge? Perhaps they are forging a path for other digital currency companies who might not get that warm-and-fuzzy feeling when it comes to shelling out the money to apply for BitLicense.
It costs $5,000 just to apply for BitLicense, and by the time a company is “in”, they will likely have spent near $20,000.
A report by the New York Business Journal reveals that compliance costs as much as $100,000. Once a company has applied, they are considered to be compliance until a final determination is made. If they are denied, then they must stop doing business in New York immediately.
In the aforementioned report by the New York Business Journal, Bitstamp’s vice-president, George Frost, said that applying for BitLicense cost his company nearly $100,000 in legal, personnel, and compliance costs.
California and five other states are working on regulatory platforms like BitLicense, and digital currency companies could soon find that they are forced into compliance no matter where they are.
Will these companies continue to run from compliance or will more and more decide to settle down just as Bitstamp has? We’ll have to stay tuned.
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