Financial Services Superintendent Maria T. Vullo today announced that the New York State Department of Financial Services (DFS) has approved the application of Coinsource, Inc. for a virtual currency license.
Coinsource owns and operates touchscreen kiosks, which allow customers to buy Bitcoin with, or sell Bitcoin for, fiat currency in the form of cash. Coinsource is the first DFS virtual currency licensee to operate Bitcoin Teller Machines (BTM).
“Today’s approval is a further step in implementing strong regulatory safeguards and effective risk-based controls while encouraging the responsible growth of financial innovation,” said Superintendent Vullo. “New York’s financial services marketplace is thriving with companies committed to complying with DFS’s regulations that ensure the security of transactions, safeguard the industry and protect consumers.”
DFS has rapidly responded to innovations by licensing technology-based money transmitters under New York’s money transmitter law; online lenders under New York’s banking law; and virtual currency exchanges under New York’s financial services law. To date, DFS has approved twelve charters or licenses for companies in the virtual currency marketplace.
Presently Coinsource operates 40 Bitcoin kiosks in New York, located in New York City, Westchester and Nassau County. The company allows customers to insert cash and buy bitcoin (and store it on their mobile wallet) or sell bitcoin for cash (by scanning their mobile wallet at the kiosk).
CEO of Coinsource Sheffield Clark said, “Coinsource is the first and only company that operates BTMs to receive a New York virtual currency license. All New Yorkers — from the people that are unbanked to the people who own the banks — can use our kiosks in their neighborhood retail locations to buy bitcoin instantly in a convenient and familiar way. Now that Coinsource is a license holder, our customers can buy and sell with confidence that Coinsource meets and exceeds the high standards set by the New York Department of Financial Services. New York represents not just a center of global innovation but also one of our largest target markets. We are extremely proud to be the only BTM operator holding a New York virtual currency license.”
The approval granted by DFS today follows a comprehensive and rigorous review of Coinsource’s application and is subject to significant regulatory conditions all of which will be subject to examination and inspection by DFS examiners as well as independent consultants to ensure that important protections for New York markets and consumers are being met. The approval is based on stringent requirements including to:
Implement, monitor and update effective risk-based controls and appropriate BSA/AML and OFAC controls to prevent money laundering or terrorist financing.
Implement, monitor and update effective risk-based controls to prevent and respond to any potential or actual wrongful use of Bitcoin, including but not limited to its use in illegal activity, market manipulation, or other similar misconduct, as required by DFS’s February 7, 2018, “Guidance on Prevention of Market Manipulation and Other Wrongful Activity”.
Compliance with DFS’s transaction monitoring and cybersecurity regulations.
Maintain policies and procedures for consumer protection and to promptly address and resolve customer complaints.
Coinsource is subject to license revocation by DFS, among other regulatory and/or enforcement actions, for failing to comply with any of the provisions of DFS’s approval.