New York Defends Old Money While Crypto Industry Spends Its Golden Years in Brighter Jurisdictions

By Frank Corva

New York is a money city.

Actually, let me rephrase that … New York is an old money city.

Home to Wall Street, New York City touts itself as the global center of finance.

But we live in an era now where finance is becoming decentralized via Bitcoin (BTC) and other cryptocurrencies.

This isn’t to say that the industry around crypto is decentralized. Quite the contrary: The industry is chock-full of centralized exchanges — platforms that provide customers with access to digital assets.

Many of these exchanges aren’t permitted to operate in New York State, though, thanks to something called a BitLicense.

The BitLicense

A BitLicense is a business license that crypto exchanges must obtain if they want to service customers in New York State. Obtaining a BitLicense became a requirement for crypto exchanges that want to operate in New York State as of August 2015. 

It seems logical that such a license would exist, but many in the industry who have looked into obtaining a BitLicense have shared just how difficult it is to obtain one.

These industry professionals have explained the administrative process for obtaining a BitLicense is long, tedious and expensive. Some crypto exchanges reported spending upwards of $50,000 in efforts to obtain the license.

Essentially, bureaucrats in New York State believed that they could throw their weight around in efforts to create a protective moat around Wall Street. 

In other words, some have speculated that when lawmakers in New York State created the BitLicense they did so out of fear that Bitcoin and other digital assets have the potential to drain money and influence out of Wall Street’s hands.

But New York State shot itself in the foot by trying to protect its old financial guard.

What New York State’s elected officials and administrators learned in the years prior to creating the BitLicense is that many crypto exchanges were just as happy not to play New York State’s game. 

Many crypto exchanges — platforms that sell assets designed to increase financial inclusion — not only gave up on serving New York State residents, but they set up their offices outside of the state, as well. 

Some exchanges have opened offices in more welcoming jurisdictions like Miami.

Miami has been far friendlier to the crypto industry thanks to its forward-thinking mayor, Francis Suarez.

Miami, the new New York

A visionary leader, Suarez has turned Miami into a crypto town.

He’s done so by inviting not only entrepreneurs from the crypto space, but also finance-industry talent from New York along with tech-industry pros and venture capitalists from San Francisco. And he set all of this in motion with a single tweet a year and a half ago.

Suarez has since gotten Miami a crypto bull à la Wall Street’s bull to send a message that the times they are a-changin’.

New York City mayor Eric Adams saw the writing on the wall (street), and proclaimed that he would make New York City “the center of cryptocurrency” — an odd statement given the decentralized nature of digital assets. He also had his first three paychecks converted to BTC and Ether (ETH) to make a point — or at least to put on a little show. Side note: Suarez takes all of his paychecks in Bitcoin.

Adams seems willing to pose like someone who’s in favor of opening New York City’s doors to the crypto industry. He’s even called for an end to “the BitLicense scheme.” The problem is that few believe he means what he says.

Also, Adams recently flip-flopped on whether or not he supports New York States’ recent bill to ban specific Bitcoin mining operations. This — again — undermines his credibility. 

It seems like Adams just likes to say the things that crypto supporters want to hear. We’ve yet to see any substantial action from him, though.

Bad company

As a New York State resident, when you try to open an account with some crypto exchanges, you receive a message explaining how the exchange doesn’t service jurisdictions including New York State, Iran, Syria, and North Korea. Really great to see New York in the company of such progressive places. 

I can’t help but wonder what New York State politicians and bureaucrats truly think of this. How much longer can they continue to pretend that they’re acting in efforts to protect customers when it seems that they’re only trying to protect Wall Street?

Luckily, there have been some troopers in the crypto industry who have put in the time, effort and money required to obtain a BitLicense so that us New York State-dwelling crypto enthusiasts have ways to buy crypto.

Wake up, New York

Hopefully, the powers that be in New York State will soon wake up and realize how their actions have driven top talent in the burgeoning crypto industry out of the state and how they’ve restricted New York State residents from purchasing specific digital assets only available on exchanges restricted from operating in the state.

If New York City intends to maintain its brand as a “money city,” then the state’s government better recognize the evolving nature of money and stop acting to protect the old, stale version of it.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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