Difference between revisions of "BitLicense"

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|org=Davis Polk|date=May 18, 2018}}</ref> New York State-chartered banks are excepted from the rules if they have previously received specific appropriate permission from the Department of Financial Services to engage in cryptocurrency business activities.<ref>{{cite web|url=https://www.morganlewis.com/pubs/nydfs-releases-final-rules-for-licensing-virtual-currency-businesses-in-new-york|name=Lawflash|org=Morgan Lewis|date=May 18, 2018}}</ref> Exempted also are persons simply making or receiving payments in cryptocurrencies, participants in customer affinity programs that award tokens, and software providers which do not handle or hold cryptocurrencies for customers.<ref>{{cite web|url=https://www.davispolk.com/files/2015-06-05_New_Yorks_Final_BitLicense_Rule.pdf|name=New York’s Final “BitLicense” Rule: Overview and Changes from July 2014 Proposal|org=Davis Polk|date=May 18, 2018}}</ref>         
 
|org=Davis Polk|date=May 18, 2018}}</ref> New York State-chartered banks are excepted from the rules if they have previously received specific appropriate permission from the Department of Financial Services to engage in cryptocurrency business activities.<ref>{{cite web|url=https://www.morganlewis.com/pubs/nydfs-releases-final-rules-for-licensing-virtual-currency-businesses-in-new-york|name=Lawflash|org=Morgan Lewis|date=May 18, 2018}}</ref> Exempted also are persons simply making or receiving payments in cryptocurrencies, participants in customer affinity programs that award tokens, and software providers which do not handle or hold cryptocurrencies for customers.<ref>{{cite web|url=https://www.davispolk.com/files/2015-06-05_New_Yorks_Final_BitLicense_Rule.pdf|name=New York’s Final “BitLicense” Rule: Overview and Changes from July 2014 Proposal|org=Davis Polk|date=May 18, 2018}}</ref>         
  
Any entity or individual who wants to conduct a cryptocurrency business in New York must apply to the Department of Financial Services and provide extensive information about the its own business and that of its affiliates, detailed biographical information about all key people along with an independent investigatory report, financial statements, banking details, copies of written policies and procedures. As of July 24, 2019 fourteen firms had been approved as BitLicensees: [[Circle]], XRP II, [[Coinbase]], [[Bitflyer]], [[Paxos]], [[Xapo]], [[Square]], Inc., [[BitPay]], [[Coinsource]], [[Robinhood]], [[Moon]] Inc., LibertyX, [[Bitstamp]], two subsidiaries of [[SeedCX]], and Genesis Global Trading.<ref>{{cite web|url=https://www.coindesk.com/ny-grants-fifth-ever-bitlicense-crypto-exchange-genesis-global-trading/|name=NY Grants Fifth-Ever BitLicense to Genesis Global Trading|org=Coindesk|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1904092|name=DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITSTAMP USA, INC.|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/about/press/pr1806141.htm|name=DFS CONTINUES TO ADVANCE RESPONSIBLE GROWTH IN NEW YORK’S FINTECH INDUSTRY WITH NEW VIRTUAL CURRENCY APPROVALS|name=Department Grants New Virtual Currency License to Xapo Inc.|org=NYDFS|date=July 24, 2019}}</ref>
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Any entity or individual who wants to conduct a cryptocurrency business in New York must apply to the Department of Financial Services and provide extensive information about the its own business and that of its affiliates, detailed biographical information about all key people along with an independent investigatory report, financial statements, banking details, copies of written policies and procedures. As of July 24, 2019 fourteen firms had been approved as BitLicensees: [[Circle]], XRP II, [[Coinbase]], [[Bitflyer]], [[Paxos]], [[Xapo]], [[Square]], Inc., [[BitPay]], [[Coinsource]], [[Robinhood]], [[Moon]] Inc., LibertyX, [[Bitstamp]], two subsidiaries of [[SeedCX]], and Genesis Global Trading.<ref>{{cite web|url=https://www.coindesk.com/ny-grants-fifth-ever-bitlicense-crypto-exchange-genesis-global-trading/|name=NY Grants Fifth-Ever BitLicense to Genesis Global Trading|org=Coindesk|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/reports_and_publications/press_releases/pr1904092|name=DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITSTAMP USA, INC.|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/about/press/pr1806141.htm|name=DFS CONTINUES TO ADVANCE RESPONSIBLE GROWTH IN NEW YORK’S FINTECH INDUSTRY WITH NEW VIRTUAL CURRENCY APPROVALS|name=Department Grants New Virtual Currency License to Xapo Inc.|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/about/press/pr1806141.htm|name=
 
Paxos Trust Company LLC, an Existing DFS Licensee, is Now Authorized to Offer Additional Products and Services|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/about/press/pr1807161.htm|name=DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITPAY, INC.|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/about/press/pr1806181.htm|name=DFS GRANTS VIRTUAL CURRENCY LICENSE TO SQUARE, INC.|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.coindesk.com/a-new-nydfs-division-will-oversee-licensing-for-crypto-startups|name=New NYDFS Division to Oversee Licensing for Cryptocurrency Startups|org=Coindesk|date=July 24, 2019}}</ref>
 
Paxos Trust Company LLC, an Existing DFS Licensee, is Now Authorized to Offer Additional Products and Services|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/about/press/pr1807161.htm|name=DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITPAY, INC.|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.dfs.ny.gov/about/press/pr1806181.htm|name=DFS GRANTS VIRTUAL CURRENCY LICENSE TO SQUARE, INC.|org=NYDFS|date=July 24, 2019}}</ref><ref>{{cite web|url=https://www.coindesk.com/a-new-nydfs-division-will-oversee-licensing-for-crypto-startups|name=New NYDFS Division to Oversee Licensing for Cryptocurrency Startups|org=Coindesk|date=July 24, 2019}}</ref>
  

Revision as of 14:33, 23 September 2019


BitLicense is the common name for the license issued by New York State to cryptocurrency businesses. It was the first and, at least until mid-2019, only license or registration for cryptocurrency trading platforms and brokers in the U.S. The rules apply both to New York resident persons and entities and to persons and entities out of state that conduct cryptocurrency business with New York residents. On June 24, 2015 the New York State Department of Financial Services (DFS) published a set of rules called "Virtual Currencies," the application of which results in a so-called BitLicense that can be granted by the department.[1][2]

Claiming that “DFS, of its own initiative, and without the New York State Legislature’s mandate or instructions, adopted a regulatory scheme (commonly called the ‘BitLicense’) to quash the growth of cryptocurrency-based businesses in New York,” Theo Chino sued to abolish the Bitlicense. First filed in 2015, Chino's suit claims that the Bitlicense discriminates against bitcoin businesses such as his payments company, Chino Ltd. The case moved to the New York Court of Appeals in September 2019.[3]


Bitcoin-bitlicense.jpg

Framework

The New York BitLicense is comprehensive. It applies to all persons in New York State or doing business with New York State persons from another location.[4] It covers a wide range of activities including transmission of cryptocurrency, holding cryptocurrency for others, buying and selling cryptocurrency as a customer business, providing exchange services to customers, and issuing cryptocurrency.[5] New York State-chartered banks are excepted from the rules if they have previously received specific appropriate permission from the Department of Financial Services to engage in cryptocurrency business activities.[6] Exempted also are persons simply making or receiving payments in cryptocurrencies, participants in customer affinity programs that award tokens, and software providers which do not handle or hold cryptocurrencies for customers.[7]

Any entity or individual who wants to conduct a cryptocurrency business in New York must apply to the Department of Financial Services and provide extensive information about the its own business and that of its affiliates, detailed biographical information about all key people along with an independent investigatory report, financial statements, banking details, copies of written policies and procedures. As of July 24, 2019 fourteen firms had been approved as BitLicensees: Circle, XRP II, Coinbase, Bitflyer, Paxos, Xapo, Square, Inc., BitPay, Coinsource, Robinhood, Moon Inc., LibertyX, Bitstamp, two subsidiaries of SeedCX, and Genesis Global Trading.[8][9][10][11][12][13][14]

As New York State-chartered trust companies, Gemini and itBit do not have BitLicenses. They have received specific authorizations from the Department of Financial Services to operate their cryptocurrency exchanges in accordance with their trust charters. [15] The Intercontinental Exchange's affiliate, Bakkt, received a trust company license which enables it to provide delivery services on the exchange's bitcoin futures contracts.[16]

References