Circle Internet Financial Ltd., a Boston-based bitcoin startup backed by Goldman Sachs Group Inc., has become the first firm to receive a New York State BitLicense, allowing it to offer digital-currency services in New York. The issuance of the first BitLicense marks a victory for both Circle and the State of New York.
The BitLicense is considered the most restrictive state regulation for bitcoin and has caused some bitcoin companies to discontinue serving New York State. The goal of the license is to provide a framework that allows digital-currency firms to build their services, but at the same time protect consumers through requirements such as anti-money laundering compliance and cybersecurity guidelines.
Internet entrepreneurs Jeremy Allaire and Sean Neville founded Circle in 2013.
The BitLicense was introduced by Benjamin Lawsky, then Department of Financial Services (DFS) superintendent, in January 2014.
Circle Notes Concerns About BitLicense
“We’ve been fairly vocal about our concerns with the BitLicense, especially in its initial incarnation,” the company noted in a blog.
Many of those issues were resolved, and though still not perfect, the BitLicense and its requirements became clear and irrefutable prerequisites for serving and supporting everyone in New York. We are the first company to be granted a BitLicense, and we also hold a Money Transfer License for US dollar transactions in the state of New York. We want to help people everywhere around the globe, and that includes New Yorkers.
Mobile Payment Automatically Converts Currency
The announcement of the license came as the company unveiled a new version of its online service, CirclePay, which aims to broaden the appeal of digital payments.
“We’re pushing bitcoin into the background for the sake of bringing bitcoin to more people,” CTO Sean Neville told The Wall Street Journal.
Circle can now offer a mobile payment service that can send and receive and hold U.S. dollars, in addition to bitcoin. The service will also allow users to send and receive payments via a text message, and does not require users convert into and out of bitcoin. The service manages the currency conversion automatically. The company will add more currencies, like the euro, as it gets regulatory approval overseas.
“Now in the United States, you can send, receive, and hold US dollars in addition to using bitcoin for payments within the Circle app,” the company noted in its blog. “You can hold US dollars but still send someone bitcoin, and likewise someone can send you bitcoin and Circle can instantly turn it into US dollars in your account.”
BitLicense Remains Controversial
The BitLicense remains controversial within the bitcoin community. Some companies, like GoCoin, have decided to “geofence” New York, meaning they won’t operate there.
At the same time, 22 companies have applied for the license, which carries a $5,000 application fee. We are trying to move expeditiously,” said Matthew Anderson, the deputy superintendent for public affairs at the DFS.
New York City is also home to a growing number of bitcoin-related businesses, including the Winklevoss twin’s Gemeni, ItBit, CoinSetter, Symbiont, and Consensys.
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