New York's Financial Regulator Is Now Inspecting Bitcoin Startups

The NYDFS is now carrying out legislated examinations of digital currency startups licensed in the state, according to an annual report.

Jun 20, 2017 at 1:00 p.m. UTC
Updated Sep 11, 2021 at 1:28 p.m. UTC

The New York State Department of Financial Services (NYDFS) has released new information about the status of its digital currency licensing regime.

Issued as part of a broader annual report to the state's governor and legislature, the NYDFS provided a brief description of its overall activities, emphasizing what it believes is the continued need for oversight on the industry due to the increased "speed of transactions" that blockchain technologies enable.

Notably, the finance department also revealed that it has begun to inspect the operations of digital currency startups serving customers in the state.

The filing reads:

"DFS has begun examinations of these virtual currency companies, which, like other regulated financial services entities, are subject to periodic examinations by DFS."

As part of a 2015 law, digital currency startups must agree to examinations conducted at least once every two years. Such examinations enable the regulator to inspect "books, records, accounts, documents" and other company items, per the final text.

Elsewhere, the NYDFS noted that it has now licensed five virtual currency companies. To date, Circle, Coinbase and Ripple have all received a so-called 'BitLicense', while others, including Gemini and itBit (now Paxos) have been granted banking charters as an alternative avenue to oversight.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Circle, Coinbase, Paxos and Ripple.

New York image via Shutterstock

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