The New York State Department of Financial Services (NYDFS) has released the application forms that Bitcoin companies in the state must complete by August 8 in order to register their businesses.
The BitLicense was formally adopted earlier this week through publication in the New York State Register. All Bitcoin firms must now complete the 31-page application form and pay a non-refundable US$5,000 application fee in order to continue operating.
Jesse Powell, co-founder and CEO of Kraken, said heavy compliance costs on digital currency exchanges made it more difficult to operate profitable exchanges. He continued:
“Many fear it will stifle innovation in the industry and exclude New York from the developing currency.”
The final revisions to the New York State regulatory program on digital currencies were released earlier this month by the superintendent of financial services for the NYDFS Ben Lawsky, with minor updates to improve functionality and make state regulators’ roles more clear.
Following its official adoption, the application form was released yesterday for Bitcoin companies to fill out. Aside from basic company information, it asks applicants to list all jurisdictions where they have licenses, or have applied for them, as well as indicate whether they have ever been the subject of regulatory or enforcement action in any jurisdiction.
Companies must provide copies of all insurance policies, as well as biographical information on all company directors and stockholders. They must also provide an organization chart of the company’s management structure, along with “an explanation of the methodology used to calculate the value of virtual currency in fiat currency.”
Applicants must also provide an investigative background report prepared by an independent investigatory agency for each individual applicant, including information such as credit history, employment history, and motor vehicle ownership history. Three personal references from non-relatives are required for all applicants.
The BitLicense has prove controversial, with Eobot last week becoming the third firm to exit the state as a result of the new regulations. Though Lawsky has said regulators “need to realize their own limitations; recognize what they do not know, and keep an open mind when approaching new technologies,” many have criticized the scope of the regulations.
Users on Reddit reacted sarcastically to the length of the application form, with cointastical saying:
“Thank you, Mr. Lawsky, for regulating this industry!!! Might you, by chance, know anyone who can help me comprehend the 31 pages of this document, complete the application, and then comply with the requirements? Yourself, perhaps?”
Another user assumed Lawsky’s name, replying to the above message with: “I worked tirelessly on the BitLicense, only taking big companies with deep pockets advice, so that I could come up with a complex process only my consulting firm will be able to help you with.”