On June 13, 2016, the New York State Department of Financial Services (“NY DFS”) announced that it had issued a BitLicense to XRP II, LLC (“XRP”), an affiliate of Ripple Labs, Inc. (“Ripple”).
This approval follows the NY DFS approvals in May 2015 of itBit Trust Company and October 2015 Gemini Trust Company, both limited purpose trust companies established and authorized to engaged in the virtual currency business. In addition, in September 2015, the NY DFS approved the first BitLicense to Circle Internet Financial under the BitLicense regulations.
The name Ripple Labs may sound familiar to readers of this blog because on May 5, 2015, the Financial Crimes Enforcement Network (FinCEN), the US federal anti-money laundering agency, announced a $700,000 civil penalty against Ripple and XRP for acting as an unregistered money services business. Ripple and XRP II also entered into a 3-year settlement agreement with the US Justice Department resolving possible criminal charges and forfeited $450,000, which was credited towards payment of the FinCEN civil penalty. In addition, the two companies agreed to take additional steps as part of the settlement agreement, including registration as a money services business. In its press release announcing the BitLicense approval, the NY DFS made no mention of the FinCEN and Justice Department actions, but did note that it had “conducted a rigorous review of that application, including but not limited to the company’s anti-money laundering, capitalization, consumer protection, and cyber security standards.”
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