Summary of NY State Dept of Financial Services Bitlicense Guidelines

Link to full guidelines


All Public Responses to the Bitlicense Guidelines


Merchant's accepting Bitcoin for goods and services will not be required to register for a Bitlicense. Most other Bitcoin related businesses will have to register for a Bitlicense. They will have to register if:

  • They transfer Bitcoins on behalf of one person. This includes Bitcoin Mixers, Blockchain.info Send Shared, CoinJoin, Dark Wallet
  • They buy or sell Bitcoins as a business activity. This appears to include LocalBitcoins sellers.
  • They create a virtual currency, even if it is decentralized. This appears to refer to creating altcoins.
  • They trade any virtual currency, even for another virtual currency. This appears to include altcoin exchanges that don't allow direct USD trading.
  • They hold or have control over Bitcoins for their users. This includes Coinbase, Circle, Greenaddress.it, and basically all exchanges.

Holders of Bitlicense's will be required to:

  • 45 days for existing businesses to comply with the new regulations and register with the state.
  • Background check required for all employees/founders.
  • Fingerprints of the above submitted to FBI.
  • Requires a bond held with New York State.
  • Requires written approval of all new business activities/offerings.
  • Requires that you keep 10 years of records of business transactions.
  • Virtual currency accounts not active for 5 years must be handed over to the state.
  • Retained earnings and profits of the company can ONLY be invested in US dollars: Federal bonds, state bonds, or money market funds.
  • Mandatory reviews every 2 years: financial condition, safety/soundness of business, policies...
  • Quarterly financial statements required within 45 days of the closing of each quarter.
  • Financial statements must be audited, use GAAP.
  • Typical AML/KYC requirements.
  • Cybersecurity requirement: requires security officer, security plan, audits, backup plan.
  • In marketing/advertising, you must include Licensed to engage in Virtual Currency Business Activity by the New York State Department of Financial Services.
  • Must disclose a long list of material risks with dealing with virtual currency: e.g., not legal tender, backed by any government

The proposal also has guidelines for Bitcoin businesses that have NY residents as customers. Even if they are incorporated overseas they have to perform the following actions on all NY residents:

  • Perform AML and collect identities, including verification of government issued Photo ID and proof of address, and retain these information for 10 years.
  • Retain all transaction logs for 10 years, including timestamp, amount, addresses, user physical addresses, transaction purchase, notes, both the AML of the sender and receiver.
  • Report transactions over the USD value of $3000, and file Suspicious Activity Reports.
  • Maintain collateral in the form of USD, including collateral for Bitcoin balances. The % as collateral is unspecified.

Disclaimer: This post is intended solely to provide information. As I have no knowledge of individual circumstances and technical level, readers are expected to complete their own due diligence before proceeding with anything mentioned in this article. The topics discussed in this post are advanced and readers proceed at their own risk. Readers are expected to complete their own due diligence before purchasing or selling anything mentioned or recommended.