BitLicense Definition
BitLicense is a term used for a business license of virtual currency activities, typically involving cryptocurrencies like Bitcoin, issued by the New York State Department of Financial Services (NYSDFS). This is under regulations designed for companies that hold, store, control, and issue digital assets on behalf of customers.
BitLicense Key Points
- BitLicense is a mandatory regulatory license for cryptocurrency businesses in New York.
- It was established by the New York State Department of Financial Services (NYSDFS).
- It imposes strict regulations to protect consumers and prevent illicit activities like money laundering.
- It is often seen as a controversial policy due to its stringent compliance requirements.
What is BitLicense?
A BitLicense is a business license given for any form of cryptocurrency operation in New York state. It was developed and implemented by the NYSDFS in 2015. Its primary aim is to regulate digital currency businesses and ensure the protection of customers’ assets.
Who Needs a BitLicense?
If a company operates a virtual currency business activity involving New York or a New York resident, the NYSDFS requires it to acquire a BitLicense. This includes digital currency exchange companies, wallet providers, payment processors, and other companies engaged in cryptocurrency trading.
When Was BitLicense Introduced?
The BitLicense was introduced by the NYSDFS on June 24th, 2015. It was proposed in 2014 by the then-Superintendent of Financial Services, Benjamin M. Lawsky, and came into effect after a year of public discussion.
Where is BitLicense Applicable?
BitLicense is applicable exclusively within the state of New York. However, businesses not situated in New York but catering to New York residents or involving any degree of activity related to New York must also comply with the BitLicense regulations.
Why was BitLicense Created?
BitLicense was created to establish a regulatory framework for firms dealing in digital currencies within New York State. It aims at eliminating nefarious activities such as money laundering, fraud, and cybercrime. It also seeks to provide a level of transparency and trust in the evolving digital currency market.
How has BitLicense been received?
The BitLicense policy has been met with significant criticism in the digital currency community. While it intends to provide security and safety for consumers, many startups and smaller companies have complained that its strict regulations and hefty fees hinder growth and innovation. Despite the controversy, its creation remains a landmark move towards the regulation of cryptocurrencies.
