Bittrex fails to meet New York’s requirements for BitLicense

New York’s financial services regulator has denied crypto exchange Bittrex its application for the state’s coveted virtual currency license, the BitLicense.

In a blow to the U.S.-based exchange, the Department of Financial Services (DFS) announced on Wednesday that it would not be approving the firm’s application for a virtual currency license, which would have seen them become the 20th company to be awarded the license since the scheme began in 2014.

BitLicense is mandatory to operate virtual currency services in the state of New York, and the decision now means Bittrex will be unable to serve customers within the state.

Explaining the decision, the Department of Financial Services said there were a number of failings, both in the firm’s capitalization and its business processes, which were a cause for concern with the regulator.

In particular, the regulator found issues with anti-money laundering processes, and said there was a “failure to demonstrate that it will conduct its business honestly, fairly, equitably, carefully, and efficiently.”

Bittrex has since been ordered to wind up its business in New York, with 60 days grace to ship out of the state.

Saying the decision “harms rather than protects New York customers,” the exchange has hit back, strongly disputing the department’s findings.

In a statement published on its website, Bittrex said the allegations contained a number of inaccuracies and its compliance processes were industry-leading.

According to the exchange, “Corporate responsibility is in our DNA and our commitment to regulatory and compliance guidelines is second to none…More specifically, today’s letter (from the DFS) contains several factual inaccuracies.”

Statement on the New York Department of Financial Services (NYDFS) Decision. Learn more: https://t.co/BZzwCOWqOd pic.twitter.com/Fths61aiI7

— Bittrex (@BittrexExchange) April 10, 2019

Despite the protested innocence, the decision is an embarrassing rejection for Bittrex, at a time when the firm had expected to expand its regulated offerings with New York approval.

The BitLicense is reputed to require tough compliance standards and stringent business processes, with the Department thus far highly selective in the firms it chooses to approve for virtual currency licenses.

While Bittrex might have expected to have been given the green light, the decision by the regulator shows they remain serious about upholding high standards within the New York crypto exchange sector.