LocalBitcoins, a global marketplace facilitating the in-person trade of bitcoins, has joined several other major industry players to call it quits in New York.
This week marks the end of a 45-day grace period for businesses dealing in virtual currency to either apply for the BitLicense or close shop in the state. Some of the larger, well-capitalized companies like Coinbase have applied, while itBit is exempt by virtue of its qualifications as a banking institution.
Many crypto businesses, however, have decided to no longer market their services to New York residents. They cite the licensing requirements and/or applications process as overly burdensome, not worth the return on investment. This week saw both from the state.
On its blog, LocalBitcoins expresses regret for withdrawing from another region “due to regulators.” Last year, after being contacted by BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht), the country’s financial supervisory authority, also apparently on the matter of licensing. On New York, the company writes:
“We’re sad to say that due to regulators another region has had to be blocked from LocalBitcoins. From today onwards users from New York are no longer allowed to use LocalBitcoins because of the legislation known as the BitLicense (23 NYCRR 200) which makes it a federal offense to sell virtual currency to people living in New York unless you have applied for the license.”
It referred to the BitLicense as “time consuming, expensive and difficult to obtain for anything but large companies.”
US residents will get a one-time pop-up inquiring if they live in New York State.
It ends off expressing future hope that “regulation will in the future accommodate small time bitcoin sellers who do not have the possibility to comply with regulations made for big financial institutions.”
Most bitcoin commerce facilitated by LocalBitcoins is simply through advertisements, where users make offers, meet in person and settle the transaction themselves. For this, no licensing is required. However, it also provides an escrow service whereby it does transmit funds.
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