The New York State Department of Financial Services (NYDFS) has awarded cryptocurrency exchange Coinbase a formal license to do business in the state.

Though Coinbase has been allowed to serve New York customers under a safe-harbor provision while the application process was being conducted, the formal award of the so-called “BitLicense” solidifies the exchange’s operating status.

Coming at a time when the exchange has been waging what could be an expensive legal battle with the IRS to protect its customer data, the license is being described as a “validation” of Coinbase’s aim to be compliant with regulatory considerations.

A representative of Coinbase told CoinDesk:

“We believe the long-term success of virtual currency and blockchain technologies will require productive partnerships between industry and government, and we will continue to make heavy investments in the security and integrity of our operations as we expand our business in New York and around the world.”

San Francisco-based Coinbase is one of the most heavily funded startups in the industry, having raised $117m in venture capital. In July, the cryptocurrency exchange began accepting ether, the digital currency that powers the ethereum blockchain, and it now allows customers to buy and sell litecoin, as well.

Formally released in June 2015, the BitLicense was designed to provide a framework for companies looking to custody bitcoin and other cryptocurrencies for their customers.

However, after an initial 22 applications were sent in, the controversial license proved too expensive for many startups.

To date, this is only the third BitLicense to be awarded.

In September 2015, Boston-based Circle was granted the first BitLicense, though by December 2016 the company had pivoted away from its bitcoin exchange to focus more on payments.

Then last July, San Francisco-based Ripple was awarded the second-ever BitLicense as part of its plans to use its blockchain-based asset XRP as a way to improve bank payments.

Image via Glassdoor 

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