Genesis Global Trading has received approval from the New York Department of Financial Services (DFS) for a BitLicense.
The license enables Genesis to facilitate the trading of several digital currencies, including bitcoin, with its institutional trading partners.
Genesis is the first New York-based trading firm to receive the license, having prior to now operated under a “safe harbour” provision with DFS that enabled digital currency trading.
“Regardless of the fact that cryptocurrencies trade worldwide, New York is still a major financial centre and so to have a firm here approved under this regime is a milestone moment for all of us,” Michael Moro, CEO of Genesis, tells Profit & Loss.
He explains that Genesis already met most of the document retention, anti-money laundering (AML) and know-your-customer (KYC) requirements for the BitLicense, because the firm is a Securities and Exchange Commission (SEC) regulated broker-dealer. However, he says that there were certain technology specifications that the firm has to adhere to in order to satisfy the DFS.
“One of the things they did have us think through, as it relates to cryptocurrencies, is bifurcating our diligence process between normal customers and high risk customers and having enhanced due diligence for those that we perceive to be high-risk. Previously, we treated everyone as high-risk but that wasn’t good enough, they wanted us to have a separate policy and so we had to come up with criteria for who comes under this high-risk category,” says Moro.
Although Moro says that the development of the BitLicense is a positive step for the crypto industry, he also notes that it could favour incumbents in the space.
“I think that the burden of being a BitLicensed company certainly isn’t cheap in terms of overhead and the expenses associated with complying with the regulations. I’m not going to say it’s impossible, but I do think that it’s a challenge for start-ups to get there in this space,” he comments.
In addition to bitcoin, Genesis has also been approved for offerings of ether (ETH), ether classic (ETC), bitcoin cash (BCH), ripple (XRP), litecoin (LTC), and Zcash (ZEC).
Moro will be speaking on the opening panel of Profit & Loss Forex Network New York conference on May 24th. The panel is titled “Trading in the ‘New Economy’”, for the full agenda and to register for the event, click here.