Coinbase receives third BitLicense from New York State

The New York State Department of Financial Services (NYDFS) has officially granted cryptocurrency exchange Coinbase a BitLicense to operate in the state.

Although Coinbase has been allowed to serve New York customers under the relevant safe harbor terms before, Coinbase has been applying for a formal "BitLicense" to obtain legal operating status in New York State.

The license comes as Coinbase is engaged in a potentially costly legal battle with the IRS over consumer data protection, and the fact that Coinbase has obtained the license also proves that Coinbase’s application for the BitLicense was also for regulatory purposes.

Coinbase CEO Brian Armstrong said in a statement:

“At Coinbase, our highest priority is ensuring that we operate the most secure and compliant digital currency exchange in the world. We are excited to receive the BitLicense and look forward to expanding our operations in New York.”

NYDFS said that before granting Coinbase the license, they conducted a comprehensive review of Coinbase's anti-money laundering, capitalization, consumer protection and cybersecurity policies.

Coinbase will continue to be regulated by NYDFS in the future.

San Francisco-based Coinbase is one of the most funded startups in the global bitcoin industry, having raised $117 million in venture capital.

A historic moment

The BitLicense was officially launched in 2015 to provide a legal framework for businesses seeking to custody and trade Bitcoin and other cryptocurrencies.

However, with only 22 applications initially granted, the controversial license has proven to be too costly for many startups. In fact, Coinbase is only the third startup to receive a BitLicense so far, while the rest have had their applications rejected.

In September 2015, Boston startup Circle obtained the first BitLicense, but in December 2016, the company announced that it would abandon its Bitcoin exchange business and focus on payments.

In July 2015, San Francisco-based Ripple received a second BitLicense.

In addition to the BitLicense, the NYDFS granted banking charters to bitcoin startups Gemini Trust Company and itBit Trust Company.

NYDFS Financial Services Director Vullo concluded the statement:

“New York State remains committed to nurturing and encouraging the long-term development of new industries in the state while enforcing all necessary safeguards to protect our markets and consumers.”