New York On Its Way To Becoming A Hub Of New Crypto Businesses

Cryptocurrency was treated by many as a technological wildcard for a number of years. Many didn’t fully understand it, and even more doubted its long-term value. At this point however, it’s fair to say that cryptocurrency has gained greater legitimacy. The value of the more noteworthy cryptos has sustained itself at a reasonably high level for a while now, and more people have gotten interested in the idea of using or investing in these assets. And as this gradual transition has occurred, we’ve also seen the crypto sector becoming a busy space for new businesses.

These businesses can be any number of things. There are new lending companies emerging that deal in cryptocurrency loans, for example. There are also new exchanges popping up, where people can buy and sell different cryptocurrencies — as well as new wallets, which allow people to store their crypto holdings. In some cases, we’re even beginning to see the launch of brand new crowdfunding platforms based on cryptocurrency.

This is all true in a broad sense, in that these types of cryptocurrency-related companies are actually popping up all over the world. For a number of reasons concerning compliance and regulation issues and existing start-up culture however, there are some reasons to believe that New York in particular may be on its way to becoming something of a crypto business hub.

Here are a few specific reasons this appears to be the case:

Exchange Compliance is Working in New York

When we covered the New York Financial Services Authority issuing a BitLicense to the European crypto exchange Bitstamp, we noted that New York has a reputation for fairly strict compliance requirements. In an effort to protect consumers from any possible issues related to exchanges, the state has made it difficult in the past for exchanges to open there. We also pointed out, however, that Bitstamp marked the 19th company of its kind to earn the coveted BitLicense. This indicates that while compliance measures are strict, they’re not prohibitive. Well-designed crypto companies are proving to be able to open up under the state’s policies.

Starting Companies in New York is Efficient

It’s also worth noting that more generally, the process of starting up an official LLC (Limited Liability Company) in New York is fairly efficient. This can make the state attractive to most anyone seeking to get a business off the ground, crypto or otherwise. A guide to setting up an LLC in New York by Zen Business outlines the process clearly, noting the need to name the business, appoint a registered agent, file a Certificate of Organization with the state, and then set up an official Operating Agreement, as well as tax filing status. All of this requires careful attention, and none of it should be taken lightly. But ultimately it is a straightforward process that makes things relatively easy on people looking to start new businesses.

Regulation Has Progressed

In the past, New York has been notable for its resistance to new cryptocurrency-related projects. Strict regulations appeared to be designed to limit the expansion of crypto usage and the emergence of related companies throughout the state. However, changes at the New York Department of Financial Services in 2019 appear to have changed this situation for the better. According to Crowdfund Insider, a new division at the NYDFS is now meant to “forward the state of New York as a center for innovation in finance.” While it’s difficult to say exactly what this will mean in any particular case, the impression is that New York is opening itself up to more innovation in finance — including in cryptocurrency — as a means of making itself more competitive.

New Companies Are Already Succeeding

It’s also important to note that there have been recent successes when it comes to crypto-related companies in the area. Most significant of the bunch may be BlockFi, a crypto lending start-up that, according to a write-up on the New York Business Journal, recently raised $50 million in a Series C funding round. That’s a substantial figure, and while BlockFi is technically situated in Jersey City, New Jersey (just across the Hudson River from Manhattan), its success should inspire prospective crypto entrepreneurs in New York. The more we see headlines like this one relating to BlockFi, the more people will gain interest in trying their hand in the crypto business in this part of the world.

Ultimately, it would still be premature to refer to New York as a hub for crypto business right now. Given all of these conditions though, it does appear to be heading in that direction. New York is already a place where it’s relatively easy to set up a new company, and where there is a larger and more innovative workplace than you can find most anywhere else. That, coupled with the fact that the state has made changes specifically to ensure integrity and welcome crypto innovation, bodes well for the future.

In a few more years, we may well look at New York as one of the true U.S. centers of crypto business.