New York launches series of virtual currency initiatives - 01 July 2020

The initiatives include a State University of New York-related virtual currency program, a Department of Financial Services proposal of a virtual currency conditional licensing authority, guidance regarding licensees’ ability to self-certify, and additional resources to help currency market participants launch and operate in New York.

Superintendent of Financial Services Linda A. Lacewell announced that the New York State Department of Financial Services (DFS) and State University of New York (SUNY) have signed a Memorandum of Understanding (MOU) expressing their intent to launch a new SUNY-related virtual currency program, "SUNY BLOCK." Once licensed by DFS, SUNY BLOCK will be able to support nascent virtual currency entities from local communities, including those started or run by students or alumni, through the proposed conditional licensing framework.

The MOU is intended to help expand the state’s virtual currency ecosystem to new geographies and demographics and support Governor Andrew Cuomo’s efforts to foster an innovative New York economy and help New York recover from the impacts of the COVID-19 pandemic. Start-ups and emerging companies participating in the SUNY BLOCK program will be able to apply for a conditional license from DFS. This is expected to help foster and diversify research opportunities and innovation emerging from SUNY faculty, staff, students, alumni and the startups they create, to help early-stage startups take the leap from idea to market.

DFS also requested comments on a proposed new conditional licensing framework that makes it easier for start-ups to enter the New York market. Under the proposed conditional licensing framework, entities may apply for a conditional license when partnering with an existing entity authorized by DFS to engage in virtual currency business activity. The existing licensee would provide the conditional licensee with the operational, staffing, and other support the conditional licensee may need until it can obtain a full DFS virtual currency license or limited purpose trust charter on its own.

DFS announced final guidance regarding licensees’ ability to self-certify the use of new coins, and establishing an approach by which DFS will provide a list of approved coins that all licensees can easily adopt. This follows the Superintendent’s announcement during DC Fintech Week in October 2019 that DFS would revisit the virtual currency requirements established in 2015 and evaluate if any adjustments should be made to responsibly adapt the regulations and their application to an evolving industry.

Finally, DFS is issuing additional resources, including a notice of DFS practices aimed at creating a more transparent and timely process for the evaluation of virtual currency license applications and new virtual currency-related Frequently Asked Questions that address questions identified through discussions with current and prospective market participants. The FAQs will be updated and augmented on an ongoing basis as DFS receives questions and feedback from industry and New Yorkers.

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