Bittrex exchange denied BitLicense
The U.S.-based crypto exchange didn’t make the cut
Earlier this week, UK-based cryptocurrency exchange Bitstamp was able to receive the green light from the New York Department of Financial Services (NYDFS) for its BitLicense application. The company is now legitimately able to offer its services in the state and has plans to expand across the U.S. Another crypto exchange didn’t have the same luck, though, and has now been ordered to pack it bags and get out of the state.
Bittrex, a U.S.-based crypto exchange, didn’t live up to the standards of the NYDFS, according to an announcement by the department. It said, “Today the New York State Department of Financial Services (DFS) denied the applications of Bittrex, Inc. to engage in virtual currency business and money transmission activity in New York due to failure to meet the licensing requirements of DFS, primarily due to deficiencies in Bittrex’s BSA/AML/OFAC compliance program; deficiency in meeting the Department’s capital requirement; and deficient due diligence and control over Bittrex’s token and product launches.”
BSA refers to the U.S. Banking Secrecy Act, which requires financial institutions to report questionable transactions. AML cover anti-money laundering activity and OFAC is the Office of Foreign Assets Control, which oversees foreign currency transactions through U.S. financial institutions.
Bittrex has been operating under an interim license in New York while its application was reviewed. It reportedly has as many as 35,000 clients in the state, all of which must find alternatives immediately. The NYDFS adds, “Effective April 11, 2019, Bittrex must immediately cease operating in New York State and within 60 days wind down its business in New York, including transferring positions and transactions, and provide for the safe custody of assets involving New York residents, as appropriate.”
For its part, Bittrex tried to defend its policies and procedures in a response to the denial. It asserted that the company’s guidelines have been sufficient for other states and that the NYDFS is demonstrating unfair treatment toward crypto companies. However, Bittrex knew what the requirements were for a BitLicense before applying for the license and knew that the NYDFS wasn’t going to change its stance – it has said from the beginning that the policies are not negotiable – and the exchange attempted to circumvent the controls, anyway.