Coinsource, a Bitcoin teller machine firm has become the 12th company to receive a BitLicense through the New York State Department of Financial Services.
Based in Fort Worth, Texas, Coinsource is an established bitcoin ATM provider with 40 teller machines ready to be operational in the state of New York already. With the issuance of this BitLicense, the company can now actively deploy these machines for consumer use.
Although some major cryptocurrency companies such as ShapeShift and Kraken have pulled operations out of New York state after the BitLicense procedure was introduced citing the heavy costs and burden the procedure would take. Yet, it seems other companies are happy to go through this intense process to access the 4th largest state in the United States and arguably the financial capital of the world, New York City.
The Coinsource Solution
According to Arnold Spencer, Coinsource’s general counsel, the application which had been submitted all the way back in 2015 should be seen as a positive sign for the business model and compliance model. The company plans include state-of-the-art cybersecurity measures as well as disaster strategies in place preemptively. Furthermore, the Bitcoin ATMs operate with a proprietary system which was developed by the Coinsource team. The platform allows users to purchase Bitcoin 0.91% in a peer-to-peer method with minimal know-your-customer checks in place requiring only a phone number, a self-photo, and a driver’s license.
The Coinsource team spent a large number of resources to get approved for the BitLicense. A process they undertook to show more legitimacy for the automatic teller system they’ve built for Bitcoin. Coinsource operates over 200 machines currently with a presence in 19 different states, adding New York to that list today. The firm believes regulations will be key to the survival of cryptocurrency. The CEO of Coinsource, Sheffield Clark believes more regulations can help solve many of the problems in the cryptocurrency world today.
As noted, the BitLicense program issued by the state of New York has been contested by a few major cryptocurrency companies. The application process is estimated to costs companies around $100,000 to achieve approval and complete the totally legal, labor, and compliance cost associated with the license. Although this has not stopped at least a dozen companies from going through this approval process to achieve the coveted status of a BitLicense and allow for operations in the great state of New York.
The state of New York was one of the first states to create a regulatory framework for the young cryptocurrency sector. With this, they established the BitLicense in 2015 which was a way for them to ensure proper compliance for a company handling cryptocurrency assets such as Bitcoin. While many have criticized the licensing process as overly burdensome, other companies have elected to go through the process to show they are a serious contender as a service provider in the nascent crypto industry.