New York state’s financial regulator is close to approving licenses for bitcoin companies Coinbase Inc and Ripple Labs Inc, which would allow them to offer digital currency services in the state, a person familiar with the matter said on Thursday.
The New York State Department of Financial Services received applications from both companies, according to an April 28 notice published on the regulator’s website. The notices, usually published after virtual currency firms have completed the regulator’s paperwork, signal that the licensing process is nearly complete, according to the person familiar with the matter and other sources.
An exact time frame for approval of the licenses is not yet clear. The sources requested anonymity because they were not authorized to speak publicly.
Bitcoin is a Web-based “cryptocurrency” that enables users to move money across the world quickly and anonymously without the need for third-party verification. Despite being championed by some as the digital money of the future, it is often dismissed as a currency that is too volatile to invest in.
Last year, New York became the first U.S. state to issue extensive rules for virtual currency companies. The guidelines, aimed at consumer protection and prevention of money laundering, require companies to obtain what is known in the state as a “BitLicense.”
Both Coinbase and Ripple are based in San Francisco.
“We are committed to being fully compliant with all state and federal laws and applied for the license to ensure we remain so,” said a Ripple spokesman, who declined to elaborate. Coinbase declined to comment.
The four-year-old Coinbase is one of the world’s largest U.S.-based bitcoin companies. Among its backers are USAA and venture capital firms Andreessen Horowitz and Ribbit Capital. Coinbase, which markets its services to consumers and merchants, has also applied for a license that would allow it to facilitate dollar transactions.
Backers of Ripple, which filed for the license under the corporate name XRP II LLC, also include Andreessen Horowitz along with Google Ventures and IDG Capital Partners. Ripple’s service and currency, known as XRP, is for financial institutions and companies, such as banks, that provide liquidity for foreign exchanges.
Once approved, the licenses would add to a nascent digital currency industry taking hold in New York. On Thursday, NYDFS approved the application of Gemini Trust Company, founded by investors Tyler and Cameron Winklevoss, to trade a digital currency called ether on its bitcoin exchange.
(Additional reporting by Gertrude Chavez-Dreyfuss in New York; Editing by Lauren Tara LaCapra and Matthew Lewis)