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NYDFS Issues First Bitcoin ATM License
Practical Law Legal Update w-017-3903 (Approx. 4 pages)
NYDFS Issues First Bitcoin ATM License
by Practical Law Finance
| Published on 02 Nov 2018 • USA (National/Federal) |
New York Department of Financial Services (NYDFS) granted the first license for the operation of bitcoin teller machines (BTM) to Coinsource Inc., which will enable New Yorkers to use their mobile phones to exchange Bitcoin for cash at kiosks in New York.
On November 1, 2018, New York Department of Financial Services (NYDFS) granted the first license for the operation of bitcoin teller machines (BTM). The virtual currency license was granted to Coinsource, Inc., and will enable New Yorkers to use their mobile phones to exchange Bitcoin for cash at kiosks in New York. Coinsource owns and operates 40 touchscreen kiosks, like ATMs, in New York which allow its customers to insert cash and purchase Bitcoin (and store it on their mobile wallet) or sell Bitcoin for cash (by scanning their mobile wallet at the kiosk).
The NYDFS stated that it has comprehensively reviewed Coinsource's application and granted a license subject to the requirements that Coinsource:
- Implement, monitor, and update effective risk-based controls and appropriate Bank Secrecy Act, anti-money laundering (AML) and Office of Foreign Assets Control (OFAC) controls to prevent money laundering or terrorist financing (see Practice Notes, Anti-Money Laundering and OFAC Compliance Materials for Financial Institutions and Bank Secrecy Act: Compliance Issues).
- 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 NYDFS’s Guidance on Prevention of Market Manipulation and Other Wrongful Activity.
- Comply with NYDFS’s transaction monitoring and cybersecurity regulations.
- Maintain policies and procedures for consumer protection and to promptly address and resolve customer complaints.
Failure to comply with the provisions of NYDFS's approval may result in regulatory or enforcement actions, or a revocation of the license by NYDFS.