BitPay Becomes First Payment Processor to Receive BitLicense in New York

  • Bitpay gets cryptocurrency payments license from New York State
  • Permit allows BitPay to offer clearing and settlement services

Crypto payment processor BitPay has received a BitLicense, the special virtual currency license from the New York Department of Financial Services (DSF).

The permit allows BitPay to offer clearing and settlement services to New York-based companies that want to make transactions with crypto.

A BitLicense is required for all companies who provide any crypto related service including payments, storing, holding, buying and selling crypto as a customer business; controlling, administering, or issuing a virtual currency; and offering exchange services.

Stephen Pair, BitPay’s CEO said in a statement:

New York state has one of the strictest policies around businesses involved in cryptocurrency and working through the approval processes to obtain a License was important to BitPay. We believe this hard work will pay off as New York presents significant business opportunities for BitPay.

BitPay claims to have hundreds of thousands of businesses, including Microsoft, Newegg, and Virgin Galactic, as customers using their services.

Pair added “We believe this gives businesses not only in New York but across the country confidence that blockchain technology offers clear benefits to businesses engaged in e-commerce and cross-border transfers.”

So far, the regulator has only granted ten companies the license: Square, Xapo, Genesis Global Trading Inc., bitFlyer USA, Coinbase, Ripplle through XRP II subsidiary, Circle Internet Financial, Gemini Trust Company, and Paxos (formerly itBit Trust Company).

Financial Services Superintendent Maria T. Vullo said in the announcement:

We continue to work to support a vibrant and competitive virtual currency market that connects and empowers New Yorkers in a global marketplace while ensuring strong state-regulatory oversight is in place.

The new license is subject to ongoing supervision by the DFS.

ErisX Tells Regulator's Why Ethereum Futures Would Create Better Markets

  • Nasdaq and Fidelity Investments-backed ErisX exchange sends explanation letter to CFTC.
  • Letter explains that regulated Ether-based futures contract would create more efficient crypto markets.

ErisX, a US-based digital asset exchange, has filed a comment letter with the US Commodity Futures Trading Commission (CFTC) - after the federal regulator requested more information regarding Ethereum (ETH)’s current market.

Submitted on Friday, February 15, ErisX’s letter asserted:

The introduction of a regulated futures contract on Ether would have a positive impact on the growth and maturation of the market.

As covered, ErisX is a newly launched cryptoasset exchange that received $27.5 million in starting capital from multi-trillion dollar investment manager, Fidelity and Nasdaq Ventures, which is Intercontinental Exchange’s (ICE) VC investment division.

Consistent With CFTC's Efforts

In December 2018, ErisX’s management revealed its plans to offer bitcoin (BTC), litecoin (LTC), and ether (ETH) spot trading and it also noted that it was seeking regulatory approval - in order to list cryptocurrency futures at a later point this year. Explaining why such futures contracts would help investors, ErisX’s letter noted that “listing and trading Ether futures compliantly on CFTC regulated markets is consistent” with the financial regulator’s efforts to create “open, transparent, competitive, and financially sound derivative trading markets.”

The letter from ErisX further mentioned that regulated crypto-based futures would “prohibit fraud, manipulation, and abusive practices in connection with derivatives and other products subject to the (Commodity Exchange Act) CEA.” According to the CFTC, bitcoin can be considered a commodity as it has been designed to potentially replace existing fiat currencies (as a medium-of-exchange). Because of bitcoin and ethereum’s decentralized nature, they are arguably not securities, the CFTC has clarified on several occasions.

Explaining the differences between the Ethereum and Bitcoin protocol, ErisX’s letter has stated: 

Ethereum built upon some of the architectural principles of Bitcoin to extend [its] functionality of [a] distributed, (cryptographically) secured, (blockchain-enabled) record-keeping system to include new computational capabilities for the execution of arbitrary code.

"Unregulated Exchanges And Brokers" Trying To "Fill The Gap"

Per ErisX’s analysis of current trends in the global Ethereum (and larger digital asset) market, there is still not a proper regulatory framework in place. This, according to ErisX, has discouraged several large enterprises from entering the fragile crypto ecosystem. At present, ErisX believes there’s a trend emerging in which “unregulated or lightly regulated ‘exchanges’ [and] ‘brokers’ [are trying] to fill the gap, many of them off-shore.” However, ErisX cautioned there may be certain risks associated with this type of market such as increased volatility and liquidity fluctuations.

As noted in ErisX’s letter:

Not unique to Ether, but [current crypto markets could suffer due to] the current fragmented global market structure of trading platforms and ‘exchanges’ with significantly varying degrees of regulatory oversight and operational transparency and integrity.

By introducing standardized, CFTC-regulated Ether-based financial products, ErisX argues the crypto space might receive a more positive response from institutional investors - which could potentially lead to “more robust, liquid, and resilient markets.”