BitLicense
{{Short description|Business license for virtual currency}}
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.{{cite web |url= https://www.wsj.com/articles/ny-financial-regulator-lawsky-releases-final-bitlicense-rules-for-bitcoin-firms-1433345396 |title=NY Financial Regulator Lawsky Releases Final BitLicense Rules for Bitcoin Firms |author=Michael J. Casey |date=3 June 2015 |work=WSJ}}{{cite web |url= http://www.ft.com/intl/fastft/333531/ny-regulator-issues-digital-currency-framework |title=New York lays out requirements for a 'BitLicense' |work=Fast FT}}{{cite web |url= https://www.usatoday.com/story/tech/2015/06/03/bitcoin-bitlicense-lawsky-rules-final/28405317/ |title='Bitlicense' rules regulating bitcoin released |author=Kaja Whitehouse, USAToday |date=3 June 2015 |work=USA TODAY}} 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.{{Cite web|url=http://www.dfs.ny.gov/legal/regulations/adoptions/dfsp200t.pdf|title=Regulations of the Superintendent of Financial Services, part 200: virtual currencies|website=Department of Financial Services|access-date=April 13, 2017|archive-url=https://web.archive.org/web/20170328214158/http://www.dfs.ny.gov/legal/regulations/adoptions/dfsp200t.pdf|archive-date=March 28, 2017|url-status=dead}} The license was introduced and designed by Benjamin Lawsky, New York's first Superintendent of Financial Services, in July 2014.{{cite web |url= https://money.cnn.com/2014/07/18/technology/bitcoin-license |title=New York unveils Bitcoin license rules |author=Jose Pagliery, CNN |date=18 July 2014 |work=CNN}} 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.{{Cite web|url=https://www.dfs.ny.gov/legal/regulations/bitlicense_reg_framework_faq.htm|title=BitLicense Frequently Asked Questions|website=www.dfs.ny.gov|language=en-US|access-date=2018-11-06|archive-url=https://web.archive.org/web/20180926045935/https://www.dfs.ny.gov/legal/regulations/bitlicense_reg_framework_faq.htm|archive-date=2018-09-26|url-status=dead}}
Overview
The regulations define virtual currency business activity as any one of the following types of activities:
- 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.
The two following activities are excluded from the definition of virtual currency business activity:
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.{{cite press release|author=New York State Department of Financial Services|url=http://www.dfs.ny.gov/about/press2014/pr1407171.html|title=NYDFS Releases Proposed BitLicense Regulatory Framework for Virtual Currency Firms|date=July 17, 2014|access-date=July 19, 2014|archive-url=https://web.archive.org/web/20140923054843/http://www.dfs.ny.gov/about/press2014/pr1407171.html|archive-date=2014-09-23|url-status=dead}} The proposed regulations were officially published in the New York State Register on July 23, beginning a 45-day comment period.New York State Register, [http://docs.dos.ny.gov/info/register/2014/july23/pdf/rulemaking.pdf Vol. XXXVI, Issue 23 (July 23, 2014)] {{Webarchive|url=https://web.archive.org/web/20170905165750/http://docs.dos.ny.gov/info/register/2014/july23/pdf/rulemaking.pdf |date=September 5, 2017 }}, pp. 14-16. Rulemaking I.D. No. DFS-29-14-00015-P.{{cite web |url= http://www.ibtimes.com/bit-licenses-how-will-new-york-regulate-bitcoins-1552078 |title=Bit Licenses: How Will New York Regulate Bitcoins? |author=Cameron Fuller |date=31 January 2014 |work= International Business Times}} On February 25, 2015, a revised proposal notice was published, beginning another 30-day comment period.New York State Register, [https://govt.westlaw.com/nyreg/Document/I41a4b512b7e311e493b50000845b8d3e?viewType=FullText&originationContext=documenttoc&transitionType=CategoryPageItem&contextData=%28sc.Default%29 Vol. XXXVII, Issue 8 (February 25, 2015)], pp. 17-18. Rulemaking I.D. No. DFS-29-14-00015-RP.
It came into effect on August 8, 2015. At least ten{{cite web|last1=Roberts|first1=Daniel|title=Behind the "exodus" of bitcoin startups from New York|url=http://fortune.com/2015/08/14/bitcoin-startups-leave-new-york-bitlicense/|website=Fortune|access-date=10 October 2016}} bitcoin companies announced they were stopping all business in New York State because of the new regulations.{{cite web |url= http://www.bizjournals.com/newyork/news/2015/08/12/the-great-bitcoin-exodus-has-totally-changed-new.html |title=The 'Great Bitcoin Exodus' has totally changed New York's bitcoin ecosystem |work=New York Business Journal |date=August 12, 2015 |author= Michael del Castillo}}{{cite web |url= http://fortune.com/2015/06/11/bitcoin-shapeshift-new-york-bitlicense/ |title= Bitcoin company ditches New York, blaming new regulations |work=Fortune |date=June 11, 2015}} The New York Business Journal called this the "Great Bitcoin Exodus".
In September 2015, Boston-based Circle was granted the first BitLicense, although in December 2016 the company had pivoted away from its bitcoin exchange to focus more on payments.{{cite web |url= https://blogs.wsj.com/moneybeat/2015/09/22/circle-gets-first-bitlicense-releases-circlepay-new-service/ |title=Circle Gets First 'BitLicense,' Releases CirclePay, New Service |author=Paul Vigna |date=Sep 22, 2015 |work=WSJ}}{{cite web |url=https://www.reuters.com/article/us-bitcoin-regulations-idUSKCN0RM1TP20150922 |title=NY regulator issues first license for bitcoin company |author=Karen Freifeld |date=September 22, 2015 |work=Reuters |access-date=June 30, 2017 |archive-date=September 23, 2015 |archive-url=https://web.archive.org/web/20150923143035/https://www.reuters.com/article/2015/09/22/us-bitcoin-regulations-idUSKCN0RM1TP20150922 |url-status=live }}{{cite web |url=http://www.betaboston.com/news/2015/09/22/circle-gets-first-bitcoin-license-from-new-york-regulators/ |title=Circle gets first bitcoin license from New York regulators |author=Curt Woodward |date=September 22, 2015 |work=betaboston.com |access-date=September 23, 2015 |archive-date=September 23, 2015 |archive-url=https://web.archive.org/web/20150923173720/http://www.betaboston.com/news/2015/09/22/circle-gets-first-bitcoin-license-from-new-york-regulators/ |url-status=dead }}{{cite web |url= http://www.dfs.ny.gov/about/press/pr1509221.htm |title= Press Release - NYDFS Announces Approval of first BitLicense application from a virtual currency firm |author= NYDFS |date= September 22, 2015 |work= ny.gov |access-date= September 23, 2015 |archive-url= https://web.archive.org/web/20180131023602/http://www.dfs.ny.gov/about/press/pr1509221.htm |archive-date= January 31, 2018 |url-status= dead }}
Two virtual currency limited purpose trust company charters were approved by the NYDFS in 2015, the first in May 2015 to itBit, now Paxos Trust Company, and the second charter in October 2015 to Gemini.{{Cite web|url=https://www.dfs.ny.gov/about/press/pr1809101.htm|title=DFS CONTINUES TO FOSTER RESPONSIBLE GROWTH IN NEW YORK'S FINTECH INDUSTRY WITH NEW VIRTUAL CURRENCY PRODUCT APPROVALS|website=www.dfs.ny.gov|language=en-US|access-date=2018-11-06|archive-date=2018-09-11|archive-url=https://web.archive.org/web/20180911044842/https://www.dfs.ny.gov/about/press/pr1809101.htm|url-status=dead}}
In October 2015, an article 78 was filed in the Supreme Court of the State of New York challenging the authority of the New York State Department of Financial Services to define virtual currency.{{cite web |url=http://www.article78againstnydfs.com/index.html |title=Article 78 against NYDFS |access-date=2016-11-06 |archive-url=https://web.archive.org/web/20161107014434/http://www.article78againstnydfs.com/index.html |archive-date=2016-11-07 |url-status=dead }} Justice St George heard the case on October 10, 2017,{{cite web |url=http://www.article78againstnydfs.com/docs/Index-101880-15/18-Hearing/01-Transcript-version.pdf|archive-url=https://web.archive.org/web/20171031154334/http://www.article78againstnydfs.com/docs/Index-101880-15/18-Hearing/01-Transcript-version.pdf|url-status=dead|archive-date=2017-10-31|title=New York State Supreme Court Hearing Transcript}} and dismissed the case on December 27, 2017. The case is currently on appeal.{{cn|date=May 2019}}
On June 13, 2016, XRP II, LLC, an affiliate of Ripple Labs, was approved for a BitLicense.{{Cite web|title=Press Release - June 13, 2016: DFS Grants Virtual Currency License To XRP II, LLC, an Affiliate of Ripple|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1606131|website=Department of Financial Services|language=en|access-date=2020-05-06}}
In November 2017, Tokyo-based bitFlyer was awarded the fourth BitLicense{{Cite web|url=https://www.dfs.ny.gov/about/press/pr1711281.htm|title=DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITFLYER USA, INC.|website=www.dfs.ny.gov|language=en-US|access-date=2018-11-06}} and Genesis Global Trading was awarded the fifth BitLicense in May 2018.{{Cite web|title=DFS Continues Actions to Support Responsible Innovation in New York's Fintech Industry
|url=https://www.dfs.ny.gov/about/press/pr1805171.htm=DFS|website=www.dfs.ny.gov|language=en-US|access-date=2018-11-06|archive-url=https://web.archive.org/web/20180518002006/https://www.dfs.ny.gov/about/press/pr1805171.htm|archive-date=18 May 2018|url-status=dead}}
In June 2018, Hong Kong–based Xapo was awarded the sixth BitLicense{{Cite web|url=https://www.dfs.ny.gov/about/press/pr1806141.htm|title=June 14, 2018: DFS Continues to Advance Responsible Growth in New York'S Fintech Industry with New Virtual Currency Approvals|website=www.dfs.ny.gov|language=en-US|access-date=2018-06-18|archive-date=2018-06-18|archive-url=https://web.archive.org/web/20180618205329/https://www.dfs.ny.gov/about/press/pr1806141.htm|url-status=dead}} and Square, Inc. was awarded the seventh BitLicense.{{Cite web|url=https://www.dfs.ny.gov/about/press/pr1806181.htm|title=June 18, 2018: DFS Grants Virtual Currency License to Square, Inc.|website=www.dfs.ny.gov|language=en-US|access-date=2018-06-18|archive-date=2018-06-18|archive-url=https://web.archive.org/web/20180618162136/https://www.dfs.ny.gov/about/press/pr1806181.htm|url-status=dead}}
BitPay was awarded the eighth BitLicense in July 2018.{{Cite web|url=https://www.dfs.ny.gov/about/press/pr1807161.htm|title=July 16, 2018: DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITPAY, INC.|website=www.dfs.ny.gov|language=en-US|access-date=2018-11-06|archive-date=2018-08-27|archive-url=https://web.archive.org/web/20180827133600/https://www.dfs.ny.gov/about/press/pr1807161.htm|url-status=dead}}
In November 2018, Texas-based Coinsource, an operator of Bitcoin Teller Machines, was awarded the twelfth virtual currency license or charter.{{Cite web|url=https://www.dfs.ny.gov/about/press/pr1811011.htm|title=November 1, 2018: DFS GRANTS VIRTUAL CURRENCY LICENSE TO COINSOURCE, INC.|website=www.dfs.ny.gov|language=en-US|access-date=2018-11-06|archive-url=https://web.archive.org/web/20181106194634/https://www.dfs.ny.gov/about/press/pr1811011.htm|archive-date=November 6, 2018|url-status=dead}}
In November 2018, New York–based institutional Bitcoin provider NYDIG was awarded a BitLicense.{{Cite web|title=Press Release - November 14, 2018: DFS Grants Virtual Currency and Money Transmitter License to NYDIG Execution, LLC|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1811141|access-date=2021-01-17|website=Department of Financial Services|language=en}}
In January 2019, Robinhood Crypto LLC, a subsidiary of Robinhood Markets Inc., and Moon Inc., dba LibertyX were awarded a BitLicense.{{Cite web|url=https://www.dfs.ny.gov/about/press/pr1901241.htm|title=January 24, 2019: DFS CONTINUES TO ADVANCE RESPONSIBLE INNOVATION IN NEW YORK'S FINTECH INDUSTRY|website=www.dfs.ny.gov|language=en-US|access-date=2019-01-24|archive-url=https://web.archive.org/web/20190125020631/https://www.dfs.ny.gov/about/press/pr1901241.htm|archive-date=January 25, 2019|url-status=dead}}
On April 9, 2019 Bitstamp USA, Inc., a subsidiary of Bitstamp Ltd. was awarded a BitLicense.{{Cite web|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1904092|title=April 9, 2019: DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITSTAMP USA, INC.|website=www.dfs.ny.gov|language=en-US|access-date=2019-04-09}}
One day later, the NYDFS rejected Bittrex's application, citing concerns over capital requirements and lax anti-money laundering controls.{{cite news |last1=Chavez-Dreyfuss |first1=Gertrude |title=Bittrex virtual currency license rejected by New York financial regulator |url=https://www.reuters.com/article/us-crypto-currencies-bittrex/bittrex-virtual-currency-license-rejected-by-new-york-financial-regulator-idUSKCN1RM24Q |website=Reuters.com |date=10 April 2019 |agency=Reuters |access-date=30 September 2021}}
On December 3, 2019, SoFi Digital Assets, LLC, a subsidiary of Social Finance, Inc. was awarded a BitLicense as well as a money transmitter license.{{Cite web|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1912031|title=Press Release - December 3, 2019: DFS Grants Virtual Currency and Money Transmitter Licenses to SoFi Digital Assets, LLC|website=Department of Financial Services|language=en|access-date=2020-01-24}}
On December 11, 2019, the NYDFS proposed a revision to BitLicense whereby a licensee can offer any coin from a public list on the NYDFS website. The revision is still pending.{{Cite web|title=Press Release - December 11, 2019: Financial Services Superintendent Linda A. Lacewell Announces New Proposed Regime for Listing of Virtual Currencies|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1912101|access-date=2020-06-13|website=Department of Financial Services|language=en}}
In May 2020, Eris Clearing, LLC, a subsidiary of ErisX, secured a Virtual Currency License.{{Cite web|title=Press Release - May 06, 2020: DFS Grants Virtual Currency and Money Transmitter Licenses to Eris Clearing, LLC|url=https://www.dfs.ny.gov/press_releases/pr202005061|website=Department of Financial Services|language=en|access-date=2020-05-06}}
On June 24, 2020, DFS proposed a new conditional licensing framework that makes it easier for start-ups to enter the New York market. Under the proposed conditional licensing framework, entities may apply for a conditional license when partnering with an existing entity authorized by DFS to engage in virtual currency business activity.{{Cite web|title=Press Release - June 24, 2020: DFS Superintendent Lacewell Launches Series of Virtual Currency Initiatives |url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202006241|website=Department of Financial Services|language=en|access-date=2021-08-28}}
On October, 21, 2020, PayPal was the first entity approved for a conditional license in partnership with Paxos Trust Company.{{Cite web|title=Press Release - October 21, 2020: Superintendent Linda A. Lacewell Announces PayPal To Be the First Approved Entity for DFS Conditional BitLicense|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202010211|website=Department of Financial Services|language=en|access-date=2021-08-28}}
References
{{Reflist}}
External links
- [https://govt.westlaw.com/nycrr/Browse/Home/NewYork/NewYorkCodesRulesandRegulations?guid=I7444ce80169611e594630000845b8d3e&originationContext=documenttoc&transitionType=Default&contextData=(sc.Default) Virtual Currencies] in (Part 200 of Title 23 of) the New York Codes, Rules and Regulations
- [https://web.archive.org/web/20180926045935/https://www.dfs.ny.gov/legal/regulations/bitlicense_reg_framework_faq.htm BitLicense Frequently Asked Questions] From NYSDFS
{{Bitcoin}}
{{Cryptocurrencies}}
Category:2014 establishments in New York (state)
Category:United States business law