A recent article in Forbes has thrown the spotlight on the Securities and Exchange Commission’s (SEC) lawsuit against Ripple. The SEC’s involvement has opened a debate on the possibility of “regulatory overreach” by this financial watchdog. According to Forbes, the lawsuit was the subject of a panel discussion on cryptocurrency regulation. The focus of the debate was on whether the SEC may have violated the Constitutional principles of fair notice, due process, and rule of law.
The timing of the discussion comes as the Biden administration has set no clear direction on cryptocurrency regulation. While SEC Chairman Gary Gensler continues to push for a multi-agency approach, the case against Ripple means that in the short term Federal agencies will favor the “enforcement over regulation approach,” and approach that brings little clarity. New York, on the other hand, has shown a more consistent and transparent approach to cryptocurrency regulation.
New York Continues to Ease Cryptocurrency Regulations
As the financial epicenter of the U.S. and arguably the world, it makes sense for New York to be providing stability across cryptocurrency regulation.
The New York State Department of Financial Services developed a licensing framework that eases regulations for start-ups to enter the cryptocurrency market via a conditional licensing framework.
A company is able to partner with an existing firm that is authorized by the DFS to operate in the cryptocurrency space. For a full explanation of the conditional licensing regulations in New York, read our article on the Basics of Cryptocurrency Law in New York.
Companies approved for a BitLicense or Limited Purpose Trust must be engaged in the following areas of business:
- Transmitting virtual currency
- Storying virtual currency
- Buying or selling virtual currency
- Operating a virtual currency exchange
- Issuing a virtual currency
Fintech companies will also be required to be familiar with Anti-Money Laundering Rules (AML) and Know Your Customer (KYC) compliance.
Our firm has worked on Blockchain and ICO matters for clients in the US and Asia, and will continue to provide further information on any new regulations that continue to emerge. Regularly check back to our New York Law Blog and Korean Law Blog for updates on this issue.
And if you want to know more about Virtual Currency in New York, please: Schedule a Call with a New York Lawyer.