Evolution of the NYDFS Virtual Currency Licensing Regime

This document is a guide detailing the evolution of the New York State Department of Financial Services (DFS) virtual currency licensing regime, initiated in 2015 with the introduction of the Bitlicense. It outlines the regulatory framework established for institutions engaging in cryptocurrency activities in New York. The guide discusses the criticism faced by the Bitlicense and highlights the DFS's focus on financial innovation, including the creation of a Research and Innovation Division. Key changes to the licensing regime are proposed, including a conditional Bitlicense aimed at facilitating early-stage crypto businesses and a Greenlist for coins approved for listing without prior DFS approval. The document also raises questions regarding the implementation of these initiatives and the criteria for barring certain privacy coins. Additionally, it mentions the establishment of a virtual currency incubator in partnership with the State University of New York, aimed at supporting startups in navigating the licensing process. Overall, the guide emphasizes the ongoing developments and considerations within the DFS regulatory framework.