Coinbase Awarded BitLicense
On January 17, 2017, Coinbase was issued a BitLicense by the New York Department of Financial Services (“NYDFS”). This issuance comes after a thorough review of Coinbase’s anti-money laundering, consumer protection, cyber security, and financial information required by the BitLicense application.
New York’s virtual currency regulation requires virtual currency businesses to obtain a “BitLicense” in order to operate within the state. Since its introduction in June 2015, the BitLicense has proven to be a controversial regulatory structure due to its extensive data gathering standards, associated expenses, and stringent reporting requirements, even after it's granted. Because of these cumbersome and costly requirements, New York has only issued two BitLicenses before to Boston-based bitcoin startup, Circle Internet Financial Inc., and distributed ledger startup, Ripple.
While many companies initially attempted to obtain a BitLicense in order to operate in New York, the lengthy list of application requirements has led to an exodus of companies out of New York. Coinbase has been operating in New York under the safe-harbor provision, and after months of anticipation, it is now fully licensed to continue its operations as a cryptocurrency exchange.