October 21, 2020
SUPERINTENDENT LINDA A. LACEWELL ANNOUNCES PAYPAL TO BE THE FIRST APPROVED ENTITY FOR DFS CONDITIONAL BITLICENSE
Builds Upon Superintendent’s June Announcement of DFS Virtual Currency Initiatives
With DFS Approval, PayPal Partners with New York State Chartered Paxos to Engage in Virtual Currency Business Activities
Superintendent of Financial Services Linda A. Lacewell today announced PayPal, Inc. (PayPal) is the first to receive a conditional Bitlicense from the New York State Department of Financial Services (DFS). With approval from DFS, PayPal, in partnership with Paxos Trust Company (Paxos), has launched a new service enabling its customers to buy, sell and hold certain cryptocurrencies. Paxos, a New York State chartered trust company, will provide cryptocurrency trading and custodial services to PayPal for the benefit of PayPal customers.
“DFS’ approval today follows our June 2020 announcement for a new framework for a conditional Bitlicense to encourage, promote, and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers, through partnerships with New York authorized virtual currency firms,” said Superintendent Lacewell. “DFS will continue to encourage and support financial service providers to operate, grow, remain and expand in New York and work with innovators to enable them to germinate and test their ideas, for a dynamic and forward looking financial services sector, especially as we work to build New York back better in the midst of this pandemic.”
This announcement follows Superintendent Lacewell’s public comments approximately one year ago at DC Fintech week, when she promised to take a fresh look at DFS’ regulatory framework for virtual currencies. Since that time, and during the 5th year anniversary of DFS’ virtual currency licensing framework, DFS has taken a series of steps to update its approach, including guidance for companies to adopt new coins, a proposed conditional licensing framework, and additional informational resources for applicants and licensees. These efforts aim to help emerging, nascent, and seasoned firms to start, enter, and grow in New York.
“We are proud to become the first company to receive a conditional virtual currency license from the New York State Department of Financial Services,” said Dan Schulman, president and CEO, PayPal. “This approval represents an important step forward in our goal to contribute to the evolution of the regulatory framework for digital currency and help our consumers safely and responsibly engage with cryptocurrencies.”
With the DFS’ approval, New York State chartered Paxos will be able to provide trading and custodial services to PayPal to enable PayPal customers to buy, sell, and hold, virtual currency. Four DFS-approved virtual currencies will be initially available: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
“Paxos is pleased to partner with PayPal to support their entry into the cryptocurrency marketplace,” said Charles Cascarilla, CEO, Paxos. “We were the first company to receive a New York Trust Charter for virtual currency business activity so it is fitting that we are also the first to support the Department’s new conditional licensing framework. PayPal’s selection of Paxos is a reflection of New York’s status as the gold standard for cryptocurrency regulation.”
Additional information about DFS’ virtual currency business process can be found on the DFS website.
Since 2015, DFS has approved 26 entities to engage in virtual currency business activity in New York State, including today’s announcement.
Additional information about the announcement can be found on the PayPal website.