BitLicense is a business license issued by the New York State Department of Financial Services (NYSDFS) for a business who wants do business in crypto currency world. Crypto currency is also known as virtual currency, or digital currency. Some of the common virtual currencies are Bitcoin, Ethereum, Litecoin, Ripple, Bitcoin Cash, Steller and Dash.
A business needs to get a BitLicense to operate in New York if business does one or more of the followings:
- Buy and sell virtual currencies as a customer business
- Transmitting or receiving virtual currencies as a financial business
- Store, hold, or control virtual currencies on behalf of others
- Perform virtual currencies exchange services
- Issue a virtual currency
The following business activity does not require a BitLicense.
- Software development related to virtual currency
- Buy or sell goods or services, or invest in virtual currency
Here are some of the FAQ from the DSF website.
Who is required to obtain a BitLicense?
Subject to certain exceptions, anyone engaging in any of the following activities is required to obtain a BitLicense:
- Virtual currency transmission
- Storing, holding, or maintaining custody or control of virtual currency on behalf of others
- Buying and selling virtual currency as a customer business
- Performing exchange services as a customer business
- Controlling, administering, or issuing a virtual currency.
Does a consumer need a BitLicense in order to purchase goods or services with virtual currency?
No. A consumer does not need a BitLicense in order to purchase goods or services with virtual currency.
Does a merchant need a BitLicense in order to accept virtual currency as payment for goods or services?
No. A merchant does not need a BitLicense in order to accept virtual currency as payment for goods or services.
Do I need a BitLicense simply to develop software?
No. The development of software in and of itself does not require a BitLicense.
Is a BitLicense required in order to engage in “non-financial” uses of virtual currency?
Where a transaction is undertaken for non-financial purposes and does not involve more than a nominal amount of virtual currency, a BitLicense is not required.
If an entity is chartered under the New York Banking Law, does it need a BitLicense in order to engage in virtual currency business activity?
An entity chartered under the New York Banking Law must receive the prior approval of the Department to engage in virtual currency business activity. However, such a chartered entity is not required to apply for a BitLicense.
Is an out-of-state business required to obtain a BitLicense to engage in virtual currency business activity in New York State or with New York State residents?
Yes. A business must obtain a BitLicense if it engages in virtual currency business activity involving New York State or persons that reside, are located, have a place of business, or are conducting business in New York.