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New York State Trust License – Fidelity’s Step Towards Mass Crypto Adoption?

Fidelity’s cryptocurrency investment arm, Fidelity Digital Assets (FDAS) has filed for a trust license in the state of New York according to several sources. An approved application with the New York Department of Financial Services (NYFDS) will mean that FDAS will be able to offer custodial services for digital assets in the state of New York. FDAS was launched in October 2018, with the aim of providing institutional solutions for the digital asset class.

Earlier this year in May, Bloomberg reported that Fidelity will be offering more than just custodial services such as crypto trading. The crypto arm of one of the largest asset managers in the world will now be able to compete with rivals such as Coinbase, Gemini, Paxos and other large players in the crypto custodial market.

Arthur Long, a lawyer from Gibson Dunn mentioned that a trust license is “more expansive” than the BitLicense of the state of New York which is a license for crypto firms, according to The Block. By obtaining a trust license, the firm will be allowed to execute a wider range of services in the financial services industry.

What does this mean for crypto investors?

The International Crypto Exchange (ICE)’s cryptocurrency trading platform, Bakkt is also waiting for approval from the NYDFS and will also be competing with FDAS. Institutions are willing to take the step to go through substantial processes to allow regulators to get a more in-depth understanding of crypto businesses.

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Louisiana State Congress Unanimously Pass Crypto-Business Licensing Bill

Crypto businesses may soon be offered a regulated path to legalization in the state of Louisiana.

The state of Louisiana may soon pass a bill, that was filed earlier this year and will allow crypto-businesses to operate legally under a state license.

The proposed bill has been backed by Louisiana state representative Mark Weight. Should the bill be passed, the state would have a regulated crypto framework to operate within and would provide an official definition of traditionally ambiguous cryptocurrency-related terms.

Unanimous Approval

The crypto-license bill was unanimously approved in Louisiana’s House of Representatives last week. A positive sign for potential cryptocurrency providers, but it will now have to pass through the State Senate, and then to the Committee on Commerce, Consumer Protection, and finally International Affairs before final approval.

The new bill is a breath of fresh air for US virtual asset providers, who historically have been forced to set up in crypto-friendly jurisdictions like Malta and Switzerland. This has been due to the restrictive and heavily-enforced overarching US regulatory agenda to prevent cryptocurrencies from being used illegally for money laundering, purchasing contraband, and illicit content.

Louisiana appears to be the next US state demanding clarity on regulations for cryptocurrency business and BitLicenses. So far, New York has been the most active state in seeking regulatory clarity and the state has approved 18 Bitlicenses since 2015.

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NYDFS Reviews BitLicense Guidelines to Favor Crypto Agencies

The New York Department of Financial Services (NYDFS) has reviewed its 5-year old BitLicense guidelines, which will allow blockchain-based firms to apply and receive conditional BitLicenses. The new guidelines defined in an announcement by Linda. A Lacewell, the Superintendent of the Department of Financial Services also seeks to streamline the coin’s listing procedure. The DFS is also considering having more direct involvement with cryptocurrencies in a new partnership with the State University of New York (SUNY) to develop a new virtual currency program. With these new guidelines, expectations are high to see the eventual boom in blockchain activities in the state.

Provisions of the New Guideline

Since its introduction in 2015, just about 25 firms have been found worthy to be issued a BitLicense and the license gives approved agencies the authority to carry out predefined virtual currency business activity. The old provisions of the BitLicense gave little room for blockchain startups as the conditions to be met are quite stringent.

The new guidelines will empower unlicensed firms to carry out their virtual currency business activity under a company that holds the license. The allowance is predicated upon the belief that a company that seeks a conditional license will eventually apply for its own license. To be issued a conditional license, crypto companies must indicate their intention to work with the holder of a BitLicense and draft an agreement accordingly. The crypto companies will then submit the documents to the NYDFS, who’ll later review them. If the application is approved, a Conditional BitLicense will be issued alongside a list of stipulations that the company must abide by.

The guideline will also enable cryptocurrency companies, like exchanges to “self-certify” the listing of new coins. The guidelines are still under review and open to the public for scrutiny and suggestions up until August 10th. The guideline though favorable to companies aiming at crypto activities in the state will still attract strict sanctions if there is any breach of the agreement.

Implications for New York City

Already a hub for technological advancement, the new guidelines when fully operational will reposition New York City for a tremendous blockchain surge. This will further the push by blockchain technology to proliferate industries and technology-based firms in the city and beyond.

Paypal Crypto Owners Can Now Transfer Tokens to Wallets

Fintech giant Paypal Holdings has upgraded its crypto wallet capabilities. Users of the app can now send supported digital assets to other wallets.

With this upgrade, users can now send Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH) to other Paypal users as well as external wallets, which may also include those from trading platforms.

The move has now effectively opened Paypal’s crypto-economy, which at best was closed up before. The move is also being seen as a way to integrate users’ interests and demands while eliminating the monopoly tag from Paypal as a platform.

“Adding the ability to transfer, send, and receive cryptocurrencies is another step in our journey to building a more inclusive and effective financial system,” said Jose Fernandez da Ponte, SVP and GM of blockchain, crypto, and digital currencies at PayPal, in a statement. “We’re excited to connect PayPal’s customers to other wallets, exchanges, and applications, and we will continue to roll out additional crypto features, products, and services in the months ahead.”

The newly added functionality, in accordance with Fernandez da Ponte, will permit crypto holders within the Paypal app to do more with their digital assets. The move was made at a time when the digital currency ecosystem was experiencing a massive correction. Despite the current outlook, Paypal remains committed to the ecosystem in which it has started expanding beyond the shore of the United States.

“This move shows we’re in this for the long term,” Fernandez da Ponte added. “I think it’s important to stay the course and continue to invest in the space.”

Mikkel Morch, Executive Director at crypto/digital asset hedge fund ARK36, commented about the latest move of Paypal, and said despite the bear market conditions is still in the crypto space. This is significant because it shows that the popular demand for new and easier ways to access cryptocurrencies is as strong as ever.

“Clearly, users are focusing not only on the speculative aspect of cryptocurrencies but also on the innovation they offer in terms of payments and transactions. So the mainstream adoption of crypto is accelerating even in a bear market and – when broader macroeconomic conditions are right – it will inevitably be reflected in the price of these assets as well.”

Besides Paypal, other Fintech companies are also taking the initiative to support crypto transfer from one wallet to the other. Revolut is one of the platforms that has also made this move, as it looks to diversify its options to foster a broader financial inclusion.

Besides the new wallet functionality, Paypal also announced it has received a full BitLicense from the New York Department of Financial Services (NYDFS).

NYDFS to Assess Supervisory Costs from Licensed Crypto Firms

The New York State Department of Financial Services (NYDFS) has announced that it will be adopting a new regulation that will allow the government agency to assess supervisory costs from licensed crypto firms operating within the state. The supervisory costs collected through this regulation will be used to add top talent to the NYDFS’s virtual currency team. This move by the NYDFS is seen as an attempt to improve its oversight and regulatory capabilities in the rapidly-evolving digital asset industry.

According to the NYDFS, the regulation will allow it to assess the costs associated with the supervision and examination of crypto firms operating in the state with a BitLicense. The Department hopes that these new tools and resources will enable it to better regulate the virtual currency industry in New York, both now and in the future, as innovators continue to create new products and use cases for digital assets.

The new regulation was proposed in December 2022, after which the NYDFS met with key stakeholders and received feedback. The regulator noted that the proposed rule was added in response to the state’s Financial Services Law not including such a provision on the assessment of operating costs.

Since 2015, crypto firms operating in the state of New York have largely been required to apply for a BitLicense. As of February 10th, there were 33 companies involved in crypto and blockchain operating in the state under a virtual currency license, limited purpose trust charter, or money transmitter license. The BitLicense requirement has been a topic of debate, with some claiming that it stifles innovation and economic growth. In April 2022, New York City Mayor Eric Adams suggested that the state scrap the BitLicense regime.

This move by the NYDFS is likely to have significant implications for crypto firms operating in the state. The regulation will provide the NYDFS with additional resources and tools to regulate the industry, but it may also result in increased costs for firms. Nonetheless, the NYDFS believes that the benefits of the regulation will outweigh any potential downsides, and that it will help to ensure that the state remains at the forefront of digital asset innovation.

NYDFS Introduces Stricter Crypto Listing and Delisting Rules

The New York State Department of Financial Services (NYDFS) has revised its guidelines on the listing and delisting of cryptocurrencies. This move aims to bolster investor protection and ensure that virtual currency businesses adhere to heightened regulatory standards.

Since 2015, the NYDFS has been a pivotal regulator in the virtual currency sphere, introducing specific regulations like BitLicenses and trust company charters. The department’s initial guidance on the adoption or listing of virtual currencies was released in 2020.

Replacing its 2020 guidance, the NYDFS’s new directive, effective immediately, introduces more stringent requirements after considering inputs from various stakeholders. The guidelines emphasize heightened consumer protection measures and clearer risk assessment procedures to reduce ambiguities in regulatory processes. Also included are exceptions for advance notifications in specific scenarios of coin delistings and updated definitions for clarity.

Entities involved in virtual currency activities are now required to obtain DFS approval for their coin-listing policies, maintain detailed records, and communicate with DFS regarding self-certified coins. Furthermore, a crucial aspect of the new regulations is the development of a comprehensive coin-delisting policy. Entities must formulate these policies and submit them for review, complying with the revised guidelines by January 31, 2024, while presenting their draft policies by December 8, 2023.

These guidelines are set to influence a range of licensed digital currency businesses in New York. The NYDFS aims to maintain its leadership in regulating the evolving virtual currency market.

The NYDFS’s initiative is part of its broader efforts to protect investors in the cryptocurrency market. Entities like Circle, Gemini, Fidelity, Robinhood, and PayPal must comply with these new regulations, reflecting New York’s commitment to monitoring the cryptocurrency industry closely.