BitLicense

Written by Aidan Mott

Introduction

The BitLicense is a Business license created by the New York Department of Financial Services (NYDFS) that regulates the activities of virtual currency businesses in New York. It was created by Benjamin Lawsky in 2014 and is directed at companies providing virtual currency services within New York, whether the company is located in New York or is serving customers within New York.

The activities that require a BitLicense are as follows

1. 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;
2. storing, holding, or maintaining custody or control of Virtual Currency on behalf of others;
3. buying and selling Virtual Currency as a customer business;
4. performing Exchange Services as a customer business; or
5. controlling, administering or issuing a Virtual Currency.

While the costs associated with the entire process are unclear (some companies spending over $100,000), the application fee for a BitLicense is $5,000. The BitLicense is widely considered the strictest financial regulation directed towards virtual currencies in the United States. The high costs and strict requirements for acquiring a BitLicense restrict many virtual currency services provides from serving users located in New York.

Suggested Reading

Bitlicense: An Overview by Danish Javed

Bitlicenses Explained by Alan McQuinn

To find more content and up to date information check out our board on the BitLicense

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