Bird's eye view of Central Park in New York City
Bird's eye view of Central Park in New York City. Howard Kingsworth

The New York Department of Financial Services (DFS) published a notice, warning prospective and current Virtual Currency Business Activity License applicants that their applications can be denied without extensive warning. The regulator revealed a new three-strikes rule, which would allow it to deny all applications, which do not comply with inadequacies pointed out by the DFS. 

As part of the notice, the DFS explains the procedure and addresses that all firms that want to apply for a BitLicense through the NMLS portal are able to consult the checklist of requirements in the NMLS website.

The checklist has been updated so that it reflects the information DFS requires of applicants, while the regulator invites applicants to contact them with any questions that may come up via email.


The DFS outlines that it will review only applications, which include all required documents listed in the checklist: 

“Applications that are not yet in this state will be deemed unready for substantive review until the missing items have been provided, and will generally not be reviewed, except for an initial intake process to determine whether substantive review is appropriate.”

With the new practice, the regulator believes that it will expedite the review of applications that are ready, will provide more efficient use of DFS’s resources, and will limit any motivation for submitting partial applications.

Even if an application has been approved for reviewing, DFS can still deem it as unsuitable for substantive review, if material issues emerge at a later stage. Such example is if “the applicant’s business plan has been modified in a way that renders previous submissions inaccurate.”

After the procedure clarifications, DFS warned:

“…if all deficiencies involving a particular application requirement or set of requirements have not been fully and effectively addressed by the end of the response period for the third deficiency letter addressing the requirement(s), DFS may, without further notice, deny the application.”

The publishing of the notice coincides with the fifth anniversary of BitLicense. With it, exchanges and wallets providers can operate legally in the state of New York.