BitPay Inc., one of the largest bitcoin payment processors, was approved for a license by the New York State Department of Financial Services, making it the first wholesale virtual currency payments processor to receive one, according to a July 16 statement.
NYDFS cleared the provider to offer services to merchants willing to accept or issue payments in bitcoin after the agency inspected its anti-money laundering, anti-fraud, capitalization, consumer protection, and cybersecurity policies.
“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,” the company’s CEO, Stephen Pair, said in a statement.
Under its new virtual currency license, BitPay is authorized to offer products that enable businesses to accept and receive cross-border cryptocurrency payments. The firm’s customers can also manage their digital assets through the BitPay Wallet and pay with a BitPay prepaid Visa card.
The company resumed processing charitable donations, campaign donations, and nonprofit giving using bitcoin and other cryptocurrencies in New York in March with approval from NYDFS as it awaited a BitLicense for permission to offer more processing services.
“We wanted to be on the safer side of things,” Jeremie Beaudry, the company’s head of compliance, told Bloomberg Law.
BitPay has processed more than $40 million in nonprofit transactions so far in 2018, four times the amount the company did in 2017, the company’s spokeswoman, Jan Jahosky, told Bloomberg Law.
The payment processor is the eighth virtual currency firm to be licensed by the DFS. Others are Square; Xapo; Genesis Global Trading Inc.; bitFlyer USA; Coinbase Inc.; XRP II; and Circle Internet Financial, and charters to Gemini Trust Company and Paxos.
BitPay waited three years for NYDFS to approve it for a license from the time the firm submitted its application, partly because BitLicense regulations are drafted for typical virtual currency exchanges and not merchant processors, according to Beaudry.
The cryptocurrency community has criticized NYDFS for being overly burdensome in processing applications. But the agency has been approving more charter and license applications this year.
“They’re understanding that they might need to be a little more flexible with cryptocurrency companies,” Beaudry said.
On top of the time and resources needed by a company to ensure its policies and procedures are compliant with regulatory expectations, the costs associated with obtaining a license are a major hurdle for virtual currency firms trying to get a green light from the enforcement agency, he said.
Now that the firm has been approved by New York, BitPay plans to submit applications for licenses across the U.S. where they are necessary to operate, according to Beaudry.
“I’m glad that we’re past this point,” he said.
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