The regulatory institution has delivered, in just over 30 months, only 3 operating licenses to crypto initiatives: Circle, Ripple and Coinbase. DFS is concerned about the use of digital coins for purposes of corruption.
In its annual report, the New York Department of Financial Services (DFS), the state's financial regulator, revealed details of its monitoring of the local Bitcoin industry and the digital currency itself.
The financial regulator published its 2016 annual report last week, detailing a broad summary of regulatory moves, achievements, bank numbers and insurance statistics in New York state.
Interestingly, the DFS introduced its regulatory and licensing rule on digital currency companies under "[2016's] Main Achievements." He underscored the emergence of virtual currency technology and Blockchain as an opportunity and a challenge for regulators. The DFS also noted its benefits, namely improved efficiency, record keeping and compensation. Its risks, as seen by the DFS, is the ability of technologies to circumvent existing regulatory requirements. Or regulatory requirements are unable to keep up with the speed of transactions offered by Blockchain technology.
"Facilitating anonymous payments and movements of funds can be dangerous without compliance and supervision designed to protect consumers, and to prevent money laundering and the financing of illegal activities," the Department wrote.
The report also revealed, in particular, that the regulator had begun to examine digital currency companies in 2016.
An extract from the revelation says:
The DFS has begun reviews of these virtual currency companies, which, like other regulated financial services entities, are subject to periodic review by the DFS. "
The regulator ordered a regulatory license for initiatives related to the digital currency in 2015. In just over 30 months, it has issued licenses to a total of 3 companies in the industry. Circle won the first 'BitLicense' in late 2015. Ripple was next, in 2016, followed by Coinbase in January this year. In March 2017, the DFS approved Coinbase and allowed the trading of Ether and Litecoin.
The DFS claims that it has licensed five virtual currency companies so far, presumably referring to the bank letters given to the Winkevos brothers: the Gemini and Paxos exchanges (itBit at the time).
The report, which can be found here, says it is timely to regulate virtual currency companies to "prevent terrorist financing" and "combat bank secrecy and money laundering violations."