According to data obtained from the source – the New York Department of Financial Services itself – the financial regulator has only responded to 9 of 36 BitLicense applications submitted since 2015. Five have been denied, four have been approved, the rest are still going through the process.
Fortune writer Robert Hackett became interested in the question after a speech given by Erik Voorhees which lambasted New York State’s regulatory approach to cryptocurrency and said that only four companies had received approval, making it “an absolute failure.” Hackett wanted to know if this figure was true and if so, how many applications the agency was fielding.
In the time since Voorhees’ original statements at the 2018 Consensus Conference (early May), an additional six applications have been approved. Voorhees’ ShapeShift and several other companies decided to forfeit the right to do business in New York State rather than fill out a request to continue doing the business they were already doing. Another notable exchange that left was Kraken, which made bold statements in regards to its feelings toward the regulatory attempts.
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New York State is one of the most populous in the United States and home to the nation’s financial center, Wall Street, but the BitLicense seems to have so far had a tremendous slowdown effect on the state’s blockchain industry. Added to all the other hurdles that are associated with running a crypto business, including dealing with fast-paced changes in exchange rates as well as an often-confusing tax situation, the BitLicense may seem like just too much for many businesses.
Hackett says that if the current pace of approvals is kept up, NYDFS will give its blessing to another 12 Bitcoin businesses in 2019. Meanwhile several booms and busts have come and gone for crypto.
Little is known as to the reasoning for the slowness of the process. Its architect, Ben Lawsky, has since left the agency and joined Ripple.
A business model could be entirely eaten up by other jurisdictions in the time it takes a pending application to get approved. The result is that New York cannot by any stretch be considered a friendly place for crypto businesses to operate, and the sentiments of Erik Voorhees and Kraken’s Jesse Powell demonstrate as much. The irony of government paperwork slowing down development of a technology like the blockchain is hard to understate – it is the inefficient nature of government bureaucracy itself that some applications of the blockchain could heal, its own approval processes seeming to generate use cases by the handful.