According to New York’s Department of Financial Services, they have “approved the applications of Robinhood Crypto LLC, a subsidiary of Robinhood Markets Inc., and Moon Inc., dba LibertyX, for virtual currency licenses. DFS has also approved a money transmission license for Robinhood.”
NYDFS is allowing seven cryptocurrencies to be traded on Robinhood, “including Bitcoin, Ether, Bitcoin Cash, and Litecoin.”
Co-CEO Vlad Tenev commented on the matter saying:
“We’re delighted that Robinhood Crypto has been granted a virtual currency license and a money transmitter license in New York. This will complement the larger suite of investment services that New Yorkers already have access to on the Robinhood platform.”
The New York BitLicense was officially introduced in July of 2014 and is commonly seen as an extra, unnecessary burden for cryptocurrency companies to operate in the state. Well known trading exchange, Gemini, ran by Tyler and Cameron Winklevoss received the license in 2015, but it is evident they can afford to go through the motions.
It’s known to be time-consuming and expensive to complete the process. As a result, most cryptocurrency related companies do not allow NY residents to use their application, even though they are permitted to operate in other states of the US. Because of this, it’s been said that the BitLicense actually inhibits innovation for the state.
The DFS mentioned that they have only given out sixteen licenses so far:
“DFS continues to rapidly and responsibly respond to financial services market innovations by licensing technology-based money transmitters under New York’s money transmitter law; online lenders under New York’s banking law; and virtual currency exchanges under New York’s financial services law. To date, DFS has approved sixteen charters or licenses for companies in the virtual currency marketplace.”
Fortunately, the cryptocurrency industry is particularly aware of the downsides to regulation, given the inherent privacy-focused nature of the industry. So far the companies that have been granted the BitLicense say that they are excited to work with regulators to help shape regulatory guidelines for the industry.
Vlad Tenev said, “We look forward to their ongoing guidance as we prepare to launch Robinhood Crypto in New York.”
Attorney Ben Lawsky was one of the main figureheads in 2014 helping to shape the BitLicense. He then left the NYDFS to start his own consulting practice with a focus on the cryptocurrency industry. We hope that NYDFS stays open-minded to regulatory reform that fits this new technology properly, instead of forcing regulation using out-dated mindsets. For now, most companies will be forced to operate outside of NY, which hurts the company as well as the resident of the state.
Beyond this NY BitLicense, cryptocurrency users are keeping a closer eye on cryptocurrency tax reform by the IRS. Currently, each trade is seen as a gain or loss, despite having not sold back to fiat currency. This limits the amount of trading, experimentation, and most likely honest reporting of income by individuals across the entire nation.