BitLicense

A BitLicense is the common term used for a business license for virtual currency activities, issued by the New York State Department of Financial Services (NYSDFS) under regulations designed for companies.[1][2][3] The regulations are limited to activities involving the state of New York or a New York resident. People residing in, located in, having a place of business in, or conducting business in the State of New York count as New York Residents under these regulations.[4] The license was introduced and designed by Benjamin Lawsky, New York's first Superintendent of Financial Services, in July 2014.[5] Chartered entities do not require an explicit BitLicense, but may instead proceed with virtual currency activities via limited purpose trust charters approved by the NYDFS.[6]

Overview

The regulations define virtual currency business activity as any one of the following types of activities:

The two following activities are excluded from the definition of virtual currency business activity:

• receiving virtual currency for Transmission or Transmitting virtual Currency, except where the transaction is undertaken for non-financial purposes and does not involve the transfer of more than a nominal amount of virtual currency;
• storing, holding, or maintaining custody or control of virtual currency on behalf of others;
• buying and selling virtual currency as a customer business;
• performing Exchange Services as a customer business, or;
• controlling, administering, or issuing a virtual currency.

• development and dissemination of software in and of itself;
• merchants and consumers that utilize virtual currency solely for the purchase or sale of goods or services or for investment purposes.[4]

History

On July 17, 2014, the department released details on a proposed "BitLicense", which places regulations on any company or person that uses cryptocurrencies residing in New York.[7] The proposed regulations were officially published in the New York State Register on July 23, beginning a 45-day comment period.[8][7][9] On February 25, 2015, a revised proposal notice was published, beginning another 30-day comment period.[10]

It came into effect on August 8, 2015. At least ten[11] bitcoin companies announced they were stopping all business in New York State because of the new regulations.

External links

• Virtual Currencies in (Part 200 of Title 23 of) the New York Codes, Rules and Regulations
• BitLicense Frequently Asked Questions From NYSDFS