Virtual Currency

Virtual Currency

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Regulation and History

In June 2015, the New York State Department of Financial Services (“DFS”) issued its virtual currency regulation, 23 NYCRR Part 200, under the New York Financial Services Law. Since 2015, under that “BitLicense” regulation or the limited purpose trust company provisions of the New York Banking Law, DFS has granted numerous virtual currency licenses and charters to ensure that New Yorkers have a well-regulated way to access the virtual currency marketplace and that New York remains at the center of technological innovation and forward-looking regulation.


Virtual Currency Business Activity (BitLicense)

As stated in 23 NYCRR 200.3(a), “No Person shall, without a license obtained from the superintendent …, engage in any Virtual Currency Business Activity.”

23 NYCRR 200.2(q) provides, in part: "Virtual Currency Business Activity means the conduct of any one of the following types of activities involving New York or a New York Resident:

  1. 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;
  2. storing, holding, or maintaining custody or control of Virtual Currency on behalf of others;
  3. buying and selling Virtual Currency as a customer business;
  4. performing Exchange Services as a customer business; or
  5. controlling, administering or issuing a Virtual Currency.”

For licensing requirements see 23 NYCRR Part 200.


History

The virtual currency landscape has evolved substantially since the first bitcoin launched in 2009. In New York, DFS has been regulating virtual currency business activity since 2013. A brief timeline of events leading to and following the BitLicense regulation in June 2015 follows:

  • 2013 – DFS begins receiving virtual currency applications for Money Transmitter Licenses
  • 2014 – DFS holds public hearings on virtual currency; begins considering virtual currency applications for limited purpose trust company charters; publishes proposed BitLicense regulation and opens public comment period
  • 2015 – DFS revises draft BitLicense regulations and on June 24, the BitLicense regulation goes into effect
  • 2019 – DFS releases the proposed coin-listing policy framework to enhance efficiency of coin-listing process and opens public comment period
  • 2020 – Upon the 5-year anniversary of the BitLicense regulation, DFS releases new guidance and resources for virtual currency applicants and current licensed entities