By Robert Hackett, Jeff John Roberts, and Jen Wieczner
December 11, 2018

A few weeks ago, I finally got the answer I’d been waiting for.

Readers of this newsletter may recall that back in May, I submitted a Freedom of Information Law (or FOIL) request to the New York State Department of Financial Services, in an attempt to find out how many companies had applied for a BitLicense, the state’s required license for cryptocurrency businesses.

The impetus for my inquiry was a controversial discussion at the massive Consensus conference in New York earlier that month, in which Erik Voorhees, the CEO of Shapeshift, a cryptocurrency exchange, had attacked the onerousness of New York’s crypto regulations and called the BitLicense “an absolute failure.” His argument hinged on a statistic—that in the nearly three years since the BitLicense was created, only four companies had actually received approval for one, a pace Voorhees thought was too slow for the process to be effective.

I wanted more context about what NYDFS was dealing with before jumping to any conclusions—perhaps the agency had been inundated with applications and was struggling to get through a backlog, or maybe few companies had even bothered to apply, which would reinforce other aspects of Voorhees’s critique. The answer turned out to be somewhere in between.

Finally, after NYDFS pushed back its self-imposed response deadline on several occasions, I received the information I had sought about the number of virtual currency license applications to date. As of last month, NYDFS had received 36 BitLicense applications since the program’s inception in mid-2015. Five of those 36 applications had been denied, the NYDFS said in answer to my request.

As for the applications that have been approved, the agency has picked up the pace in granting licenses following public criticism. In mid-November, NYDFS awarded its 10th BitLicense to NYDIG Execution, the sixth license it has issued since Voorhees made his comments. Other BitLicense recipients this year include Genesis Global Trading, Xapo, Square, Coinsource and Bitpay (the latter three were all named in my May report as next in line for potential approval).

Crunching the numbers, that means NYDFS has made a determination on 15 of the 36 BitLicense applications it has received—less than half. Overall, it has granted BitLicense applications at a rate of nearly three per year, though if it continues at the pace it set in the last six months, the NYDFS could be on track to grant 12 of the licenses next year, or one per month.

But perhaps the most surprising part of the NYDFS data is not how many BitLicense applications it has received, but how few. The last time the agency disclosed this information was in mid-2016, when it said it had received 26 BitLicense applications in the program’s first year. In the two-and-a-half years since, only 10 additional companies have applied, despite the fact that the cryptocurrency industry is exponentially more valuable than it was when the BitLicense was created.

Indeed, if New York wants to foster the fledgling cryptocurrency economy that has sprouted roots in the state, it would do well to fast-track the BitLicense applications that remain on its desk. Robinhood, which set out at the beginning of 2018 to offer commission-free cryptocurrency trading nationwide, is still waiting on a BitLicense before it can bring the service to New York, and other startups are in similar situations. There are likely even more companies watching what happens to their predecessors’ applications before deciding whether it’s worth doing business in the Big Apple.

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Jen Wieczner
@jenwieczner
jen.wieczner@fortune.com

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