Cottonwood Vending LLC, a US-based operator of Bitcoin ATMs, has received a coveted license to deal in cryptocurrencies in New York.
Cottonwood was granted a so-called BitLicense by the New York State Department of Financial Services (NYDFS), becoming the second in its field to receive the highly-sought-after approval. Cottonwood joins only 20 other companies in the cryptocurrency space that were granted this license, which allows it to legally operate as a money transmitter and digital currency exchange.
In November 2018, Coinsource, the world’s largest Bitcoin ATM operator, became the first Bitcoin ATM operator to receive the Virtual Currency License.
To maintain a BitLicense license, a provider must fulfill various reporting requirements and comply with standards on anti-money laundering, cybersecurity, and consumer protection. And for an ATM operator, it should assure regulators that the company’s systems in place ensure its machines aren’t being used for criminal purposes, including having a repository of transaction records.
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Complicated regulatory structure
While US authorities have been relatively active on the subject of cryptocurrencies, the local community has had its ears filled with conflicting talk from different regulators and various state legislatures.
New York is the only state that requires firms dealing in digital assets to obtain a license to operate. The Empire State has established a strong state-based regulation, but the approach has been widely maligned by the crypto community for being one of the strictest laws governing this type of business.
The news follows other, similar stories of progress for Bitcoin companies in the US, though cryptocurrency regulation still happens largely on a state-by-state basis.
Cottonwood provides the largest bitcoin ATM network in New York, now operating nearly 100 machines, which allow the city residents to buy and sell the cryptocurrency for cash. Its recent regulatory filings show it has generated $35 million in revenues last year.