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New York Denies BitLicense To US Cryptocurrency Exchange Bittrex


The New York State Department of Financial Services or NYDFS denied virtual currency license, known as a BitLicense, to U.S.-based cryptocurrency exchange Bittrex for failure to meet the licensing requirements of DFS.

The NYDFS found deficiencies in Bittrex's Bank Secrecy Act (BSA)/Anti-Money Laundering (AML)/ Office of Foreign Assets Control (OFAC) compliance requirements, deficiency in meeting the Department's capital requirement, and deficient due diligence and control over Bittrex's token and product launches.

BitLicense is the license to engage in virtual currency business and money transmission activity in state of New York issued by the NYDFS.

Bittrex had applied for the license in August 2015 to engage in virtual currency business activity, and in July 2018 to engage in money transmission activity in the state of New York.

Bittrex has been engaged in virtual currency business activity in New York under the terms of a "safe harbor" during the pendency of the license application as permitted by the NYDFS.

Effective April 11, 2019, the NYDFS has ordered Bittrex to immediately cease operating in New York State and within 60 days wind down its business in New York, including transferring positions and transactions, and provide for the safe custody of assets involving New York residents, as appropriate.

THE NYDFS warned that failure to immediately cease such operation and business may invite penalties and enforcement actions in regard to the violation.

The New York regulator has granted only nineteen BitLicense's since approving the first BitLicense to industry startup Circle in September 2015. The latest to be granted the license was Bitstamp USA Inc., a unit of European cryptocurrency exchange Bitstamp Ltd., on April 10, 2019.

The controversial BitLicense regulatory framework, which came into effect on August 8, 2015, is aimed at monitoring and regulating operations of cryptocurrencies such as Bitcoin and cryptocurrency-related products being offered in the State of New York and to New York residents.

BitLicense is dubbed as one of the most restrictive cryptocurrency regulatory frameworks in North America. More than fifteen digital currency companies left the New York state because of the new regulations, including Vaultoro, Shapeshift, Paxful, Poloniex, Bitfinex, Kraken, and more. This was called "Great Bitcoin Exodus."

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