New York State Comptroller Thomas DiNapoli has expressed apprehensions regarding the management of BitLicense by the New York Department of Financial Services (NYDFS).
In a report issued in January regarding the state’s digital currency licensing, DiNapoli indicated that there were only "limited assurances" that NYDFS was completely meeting its oversight duties concerning BitLicense, which also oversees various other financial institutions in the state.
DiNapoli highlighted concerns about the scrutiny process for potential licensees, citing instances where two out of eight sampled applicants didn't complete the fingerprinting process before their application was approved. Additionally, NYDFS couldn't provide evidence validating the applicant’s tax liability or minimum net worth documentation.
The comptroller's office also noted a three-year gap between biennial examinations of licensees' financial health and the stability of their operations, which NYDFS is mandated to conduct. Furthermore, there have been cases where it took up to four years between the submission of anti-money laundering documents and the issuance of a BitLicense, rendering the documents potentially outdated.
DiNapoli suggested the establishment of a formal process to monitor the follow-up procedures.
The report also included NYDFS's response to the audit, acknowledging the need for improvement and the adoption of a tracking template to monitor inspection findings' follow-up. The department initiated a BitLicense audit outcome tracking program in April 2023; however, NYDFS only provided a track record for one out of eight sampled licensees.
Since 2015, cryptocurrency firms operating in New York have been mandated to seek BitLicense through NYDFS. Presently, the list of licensed entities includes 32 regulated firms like BitPay, Circle, Coinbase, Gemini, Paxos, and PayPal.
