Bitfinex and Kraken have become the biggest names among the growing list of cryptocurrency exchanges to pull out of New York State due to the recently enacted BitLicense regulations.
The regulations were finalized by the New York Department of Financial Services (NYDFS) in June, shortly before the departure of superintendent Benjamin Lawsky, and came into effect on July 24. They have been advocated by NYDFS for protecting consumers, but have been heavily criticized by industry startups as prohibitively burdensome.
August 10 marks the end of a 45-day grace period for virtual currency businesses to either apply for the license or leave the state. Numerous smaller virtual currency exchanges have chosen the latter, including ShapeShift, Poloniex and BitQuick, as well as merchant services provider GoCoin.
Kraken, which does not allow USD-trading to US residents, said:
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“While we’re sure that the protection from New York law enforcement is valuable, it comes at a price that exceeds the market opportunity of servicing New York residents. Therefore, we have no option but to withdraw our service from the state.”
Hong Kong-based Bitfinex, the world’s highest USD-volume exchange, stated:
“Bitfinex is not applying for a BitLicense at this time. Accordingly, Bitfinex is modifying account privileges for New York Residents, effective August 10th, 2015.”
It went on to state that customers have until midnight August 15 to withdraw their digital currency holdings, after which they will be converted to dollars based on the going market rate.