On November 1, 2018, the New York Department of Financial Services (“DFS”) announced its approval of the first virtual currency license for an operator of Bitcoin teller machines (“BTM”). According to DFS, to date it has now approved 12 charters or licenses for companies in the virtual currency space.
A BTM permits customers to insert cash and buy Bitcoin (and store it on their mobile wallet) or sell Bitcoin for cash by scanning their mobile wallet at the kiosk. The BTM operator will be subject to ongoing examination and inspection by DFS examiners as well as independent consultants. The DFS approval also requires the BTM operator to:
- Implement, monitor and update effective risk-based controls and appropriate BSA/AML and OFAC controls to prevent money laundering or terrorist financing.
- 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 DFS’s “Guidance on Prevention of Market Manipulation and Other Wrongful Activity.”
- Comply with DFS’s transaction monitoring and cybersecurity regulations.
- Maintain policies and procedures for consumer protection and to promptly address and resolve customer complaints.