What Is A BitLicense?

What is a BitLicense?

A document released in June 2015 based around digital currencies (like Bitcoin) designed to strike a balance between protecting consumers and implementing common sense rules.

To give you a brief picture of the importance of BitLicense, the document states:

Bitcoin businesses that receive, transmit, store or convert virtual currency for customers; buy and sell virtual currency as a customer business; control, administer or issue a virtual currency; or perform conversions between bitcoin and fiat or any value exchange will need to be licensed to operate in New York

You won’t need a license if you’re a retailer accepting Bitcoin as a form of payment.

Cameron and Tyler Winklevoss, who launched Gemini, told Business Insider:

“We are pleased that Superintendent Lawsky and the Department of Financial Services have embraced Bitcoin and digital assets and created a regulatory framework that protects consumers. We look forward to New York State becoming the hub of this exciting new technology.”

Superintendent Lawsky also told Business Insider: 

“We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity – without stifling beneficial innovation. Setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets.” 

The BitLicense is required for businesses engaged in the following virtual currency businesses:

  • Receiving or transmitting virtual currency on behalf of consumers;
  • Securing, storing, or maintaining control on the behalf of customers;
  • Performing retail conversion services, including the conversion or exchange of Fiat Currency or other value into Virtual Currency, the conversion or exchange of Virtual Currency into Fiat Currency or other value, or the conversion or exchange of one form of Virtual Currency into another form of Virtual Currency;
  • Buying and selling Virtual Currency as a customer business (as distinct from personal use); or
  • Controlling, administering, or issuing a Virtual Currency. (Note: This does not refer to virtual currency miners.)

Key requirements for firms holding BitLicenses include:

  1. Safeguarding Consumer Assets
  2. Virtual Currency Receipts
  3. Consumer Complaint Policies
  4. Consumer Disclosures
  5. Anti-money Laundering Compliance
  6. Verification of Accountholders
  7. Reporting of Suspected Fraud and Illicit Activity
  8. Cyber Security Program
  9. Chief Information Security Officer
  10. Independent DFS Examinations
  11. Books and Records
  12. Reports and Financial Disclosures, Audit Requirements
  13. Capital Requirements
  14. Compliance Officer
  15. Business Continuity and Disaster Recovery
  16. Notification of Emergencies or Disruptions
  17. Transitional Period

These are the companies that have applied for a BitLicense in New York:

  1. BTCC
  2. Xapo Inc
  3. Coinbase
  4. Coinsource
  5. Bittrex
  6. Coinsetter
  7. Bitstamp
  8. Circle
  9. MonateGo
  10. BTCjam
  11. Gemini

There have been a total of 22 companies that have applied for the BitLicense in New York to date.

These are the companies that have/are ceasing operations in New York:

  1. Kraken
  2. Bitfinex
  3. Local Bitcoins
  4. BTC Guild
  5. Korbit
  6. Rebit
  7. Poloniex
  8. LakeBTC
  9. ShapeShift
  10. GoCoin
  11. BitMex
  12. BitQuick
  13. Genesis mining
  14. Eobot

There are exciting things happening in the Bitcoin industry and many people believe that this is the biggest move in the space since its creation.

Without regulation people outside the Bitcoin community still see Bitcoin as the currency for buying drugs and guns on TOR.

Times have changed and the tech behind Bitcoin is tectonic.

For more information on the BitLicense check out The original DFS BitLicense framework on the NY .gov site.

If you want a summary of the details check out CoinDesk’s awesome report about the BitLicense.

Written by Blanket Media

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