New York Proposes Issuing BitLicenses
Bitcoin & Cryptocurrency Update
Date: July 28, 2014
On July 17, 2014, the New York State Department of Financial Services (DFS) issued for public comment a proposed “BitLicense” regulatory framework for New York virtual currency businesses, including bitcoin companies.
BitLicenses will be required for companies engaged in the following virtual currency business activities:
- Receiving or transmitting virtual currency on behalf of consumers
- Securing, storing or maintaining custody or control of virtual currency on behalf of customers
- Performing retail conversion services
- Buying and selling virtual currency as a customer business (rather than for personal use)
- Controlling, administering or issuing a virtual currency (this does not include virtual currency miners)
A BitLicense will not be required for a merchant who simply accepts a virtual currency in payment for goods and services.
DFS’s proposed regulatory framework would include a broad list of requirements for bitcoin businesses including safeguarding consumer assets, complying with anti-money laundering regulations (including verifying customer identity), maintaining books and records, implementing a cybersecurity program and hiring a compliance officer.
The 45-day public comment period began when the proposed DFS rules were published in the New York State Register on July 23, 2014. After 45 days, the rules are subject to additional scrutiny and revision based on public comments before DFS issues the final rules.
Our Bitcoin & Cryptocurrency group can provide clients with an in-depth analysis of the proposed regulations and their application to any existing or proposed business. In addition, we are able to assist any client who wishes to file a comment on the proposed regulations with DFS.
FOR MORE INFORMATION
For more information, please contact:
James P. Jalil
Norman A. Bloch
Thomas F. Zych
or any member of our Bitcoin & Cryptocurrency group.
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