Any New Yorker who’s venturing into the rapidly expanding and evolving market of virtual currency may have encountered the BitLicense. What is a BitLicense and when is it required? BitLicense requirements are somewhat complex, and the following may help answer some questions about it.
Who Needs a BitLicense?
New York statute 23NYCRR 200.2(q) requires a BitLicense for those who:
- Store, hold, or maintain control or custody of virtual currency for others
- Use virtual currency to conduct business with customers
- Administer, control, or issue virtual currency
- Receive and transmit virtual currency
Although these requirements seem fairly straightforward, there are caveats and restrictions that may need delineation. For instance, if a company is registered with FinCEN, it will still need a BitLicense if it engages in cryptocurrency transactions.
Transactions That Don’t Require a New York BitLicense
Not all types of transactions require a BitLicense. For example, a license isn’t needed to invest in cryptocurrency if the transaction is:
- Strictly an investment. If you’re interested in purchasing cryptocurrency, then visit okx.com for a quick and convenient transaction.
- Solely to purchase goods or services
- A donation to a charitable organization
- The sale of coins you have mined and are selling in a private, non-commercial transaction
- The development of programs and software
- Providing advice on virtual currency transactions
- A business that’s chartered under the New York banking law
In the case of software development, the service or product may require a BitLicense, depending on the type of program, such as a virtual currency wallet.
Types of Transactions That Will Require a BitLicense
The following are examples of transactions that require a BitLicense whether the entity is located in New York or is out of state:
- A charitable organization that conducts transactions using virtual currency
- Development of a virtual wallet for storing cryptocurrency for others
- Buying or selling cryptocurrency for others
- If you hold a money transmission license under New York banking law
Which Coins Does BitLicense Consider Virtual Currencies?
Although there are exceptions, most “stablecoins” are considered virtual currency and are therefore subject to licensure under 23NYCRR Part
What are the Requirements for Obtaining a BitLicense?
Requirements for capitalization are specified under 23 NYCRR.8 and vary according to the type of business and its risk factor.
A surety bond or equivalent is required, and the minimum bond amount is usually $500,000 but may be higher depending on the individual business and its risk factor.
How Long Will it Take to Process an Application?
The application processing time is relatively expeditious, but delays can be expected when the application isn’t complete. Processing will not commence until a submitted application is complete and has all information and documentation requested. Some types of businesses will require a more detailed application than others, but all are processed more quickly when they’re initially submitted with all requested information.
Additional information on BitLicense requirements can be found here .