New York’s Department of Financial Services (DFS) has issued a note of warning to cryptocurrency firms that their BitLicense applications could be thrown out without warning if they do not heed its feedback.
The financial watchdog provided an update on June 24, noting that it could deny any applications that did not address or consider any shortcomings it underlined based on a new three-strike rule.
“In general, once substantive review of an application begins, DFS staff will convey to the applicant in detailed deficiency letters (which may take the form of emails) information about any deficiencies in the application…”
“…if all deficiencies involving a particular application requirement or set of requirements have not been fully and effectively addressed by the end of the response period for the third deficiency letter addressing the requirement(s), DFS may, without further notice, deny the application.”
This comes as BitLicense turns five years old, seeing the regulator update its framework for businesses, such as exchanges and wallet providers, towards legal operations in New York State.
Since the establishment of the rules five years ago, only 25 firms have been approved, with 19 receiving actual licenses and six receiving limited purpose trust charters. The latest applicant to receive its BitLicense at the beginning of last month was the derivatives clearinghouse ErisX.
The financial watchdog updated its rules for streamlining the application process. In the regulator’s argument, the three-strike rule will help applicants to ensure that they fully address all the concerns mentioned in the deficiency letters before they resubmit their application.
The update also provides a new checklist feature that firms can utilize to make sure they complete the necessary steps, such as the provision of all the appropriate documentation prior to sending off their application to the regulator. Hence, the regulator is telling the applicants to sit up to get approval.