Virtual Currency Business Activity
In June of 2015, DFS issued virtual currency regulation 23 NYCRR Part 200 under the New York Financial Services Law. Since then 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.
- Annual Assessment Charges - BitLicense
- Title: Part 200 Virtual Currency Regulation (NYCRR - westlaw.com)
- Title: Part 500 Cybersecurity Requirements for Financial Services Companies (NYCRR - westlaw.com)
- Title: Part 504 Transaction Monitoring and Filtering Program Requirements and Certifications (NYCRR - westlaw.com)
- FAQs: Virtual Currency Businesses
Questions regarding virtual currency business activity in New York State may be referred to DFS at [email protected] and should include your full contact information.
To address delays in regulatory processes and ensure operational excellence across the Virtual Currency unit, DFS has implemented and supported a series of measures under Superintendent Harris’s supervision, known as VOLT:
- Vision: Continue as the preeminent regulator of virtual currency
- Operations: Achieve operational excellence through new processes and process management; greater communications and transparency; and commitment to constant improvement to keep pace with the market we regulate. It is critical that we make these improvements without sacrificing regulatory rigor.
- Leadership: Continue to lead through greater engagement, new policy, and a robust hiring initiative to ensure we have the expertise to be a forward-looking regulator.
- Technology: Leverage technology to streamline communications, increase transparency, and create enhanced supervision.
Information for Applicants
To conduct virtual currency business activity in New York State, entities can either apply for a BitLicense or for a charter under the New York Banking Law (for example, as a New York State limited purpose trust company or New York State bank) with approval to conduct virtual currency business. While these forms of authorization are similar, a New York State limited purpose trust company charter may provide some additional benefits. For example, a limited purpose trust company can exercise fiduciary powers, while a BitLicensee cannot. In addition, a limited purpose trust company can engage in money transmission in New York without obtaining a separate New York money transmitter license. For more information about applying for a limited purpose trust charter, visit Commercial Banks & Trusts.
BitLicense Application and License Management
The Department of Financial Services uses the Nationwide Multistate Licensing System and Registry (NMLS) to manage the BitLicense. NMLS is a secure web-based system created by state regulators to provide efficiencies in the processing of state licenses and improve supervision of state-regulated industries. Through NMLS, companies maintain a single record to apply for, amend, surrender and change license authorities in one or more states, and make reports conveniently and safely online.
Access to NMLS
To enter information into NMLS, you must first complete a Company Account Request Form and identify a Primary Account Administrator and a Secondary Account Administrator. This form can be submitted electronically through the NMLS website in the “Getting Started” section. This form needs to be submitted only once per company, regardless of the number of NMLS participating states in which you are licensed.
Within three days of completing and submitting the Company Account Request Form, the Primary Account Administrator will receive NMLS login information. The Primary Account Administrator will have full rights to access the system, submit information to this agency and other participating state regulators, and set up other company users in the system. Instructions and tutorials on how to access and use the system are also available in the NMLS Resource Center.
Managing Your License on NMLS
Each company holding a BitLicense that wishes to manage its license on NMLS must create a company record in the system (see above). Current New York State BitLicensees whose applications were submitted before the integration of the BitLicense into NMLS may transition their licenses to NMLS. See the NY Virtual Currency Business Activity Company License Transition Checklist on the NMLS website for more information.
Submitting a Substantially Complete Application
To submit an application, please follow the instructions on the NY Virtual Currency Business Activity License New Application Checklist (the “BitLicense Application Checklist”). You can view the BitLicense Application Checklist any time, even before you have an NMLS account. The BitLicense Application Checklist is a critically important guide for anyone considering applying for a BitLicense. Before submitting a BitLicense application, please read the BitLicense Application Checklist carefully. BitLicense applications must generally contain all items described in the BitLicense Application Checklist. Failure to submit all of these items, as described, is the most common reason for delays in the application process.
Please note: An application will not be deemed ready for substantive review until the Department has received all required information, documents, and fees, as described in detail in the BitLicense Application Checklist, and the required documents appear to be facially adequate in terms of organization and level of detail. (Exceptions may be made if deemed appropriate by DFS in light of specific circumstances.) Applications that are not ready for substantive review generally will not receive detailed expert review by DFS staff. Thus, the processing of an application that does not contain all items as described in the BitLicense Application Checklist may be delayed indefinitely, and ultimately the application may be denied for insufficiency. For more information on the Department’s application review process, please see DFS’s Notice of Virtual Currency Business Activity License Application Procedures.
Please also note that, in the process of considering an application, DFS may request additional information and supporting documents, beyond those found in the BitLicense Application Checklist.
Prospective applicants who have questions about the application process can send their questions to the DFS Virtual Currency Unit staff, at [email protected]. If it appears that an applicant would benefit from a more interactive dialogue, DFS staff may recommend a pre-application call or meeting (virtual or in person), at the appropriate time.
The Application Process
In the application process, an NMLS Identification Number will be assigned to your application. Please maintain a record of this NMLS Identification Number, as it will be used as your application reference number throughout the remainder of the process. The applicant’s NMLS Identification Number must be included on every hard-copy document submitted to the Department.
Note: If the applicant has already submitted Forms MU1 and MU2 through NMLS for another state, the applicant does not need to re-enter the company record into NMLS. However, the applicant is required to provide jurisdiction-specific information to support its New York State application.
Useful Links and Forms
- NY Virtual Currency Business Activity License New Application Checklist (PDF)
- Notice of Virtual Currency Business Activity License Application Procedures
- Authority to Release Information (PDF)
- Requirements for Changes in Certain Individuals
- Financial Statement (PDF)
- Fingerprinting Instructions
- Licensee Contact Update (PDF)
Guidance and Notices
|2022-09-14||Notice Regarding Ethereum’s Upcoming Protocol Change|
Updated: April 25, 2023
|Bakkt Crypto Solutions, LLC||Virtual Currency License||2022-04|
|Bakkt Marketplace, LLC||Virtual Currency and Money Transmitter Licenses||2021-03|
|Bakkt Trust Company LLC||Limited Purpose Trust Charter||2019-08|
|bitFlyer USA, Inc.||Virtual Currency License||2017-11|
|BitGo New York Trust Company LLC||Limited Purpose Trust Charter||2021-03|
|BitOoda Digital, LLC||Virtual Currency License||2022-02|
|Bitpay, Inc.||Virtual Currency License||2018-07|
|Bitstamp USA, Inc.||Virtual Currency License||2019-04|
|Block, Inc., f/k/a Square, Inc.||Virtual Currency and Money Transmitter Licenses||2018-06|
|Cboe Clear Digital, LLC||Virtual Currency and Money Transmitter Licenses||2020-05|
|Circle Internet Financial, LLC||Virtual Currency and Money Transmitter Licenses||2015-09|
|Coin Cafe||Virtual Currency License||2023-01|
|Coinbase Custody Trust||Limited Purpose Trust Charter||2018-10|
|Coinbase, Inc.||Virtual Currency and Money Transmitter Licenses||2017-01|
|Coinsource||Virtual Currency License||2018-11|
|Cottonwood Vending||Virtual Currency License||2019-01|
|eToro NY LLC||Virtual Currency License||2023-02|
|Fidelity Digital Asset Services, LLC||Limited Purpose Trust Charter||2019-11|
|Gemini Trust Company, LLC||Limited Purpose Trust Charter||2015-10|
|Genesis Global Trading, Inc.||Virtual Currency License||2018-05|
|GMO-Z.com Trust Company, Inc.||Limited Purpose Trust Charter||2020-12|
|LibertyX/Moon Inc.||Virtual Currency License||2019-01|
|NYDIG Execution LLC||Virtual Currency and Money Transmitter Licenses||2018-11|
|NYDIG Trust Company LLC||Limited Purpose Trust Charter||2018-11|
|Paxos Trust Company, LLC (f/k/a itBit Trust Company, LLC)||Limited Purpose Trust Charter||2015-05|
|PayPal, Inc.||Virtual Currency and Money Transmitter Licenses||2022-06*|
|Provenance Technologies, Inc.||Virtual Currency and Money Transmitter Licenses||2022-02**|
|Ripple Markets DE LLC (f/k/a XRP II LLC)||Virtual Currency License||2016-06|
|Robinhood Crypto||Virtual Currency and Money Transmitter Licenses||2019-01|
|SoFi Digital Assets||Virtual Currency and Money Transmitter Licenses||2019-11|
|Standard Custody & Trust Company, LLC||Limited Purpose Trust Charter||2021-05|
Zero Hash Liquidity Services, LLC
(FKA Seed Digital Commodity Market, LLC)
|Virtual Currency License||2019-07|
|Zero Hash LLC||Virtual Currency and Money Transmitter Licenses||2019-07|
*The Department granted PayPal, Inc. a conditional virtual currency license in October 2020 and a money transmitter license in October 2013.
**The Department granted Provenance Technologies, Inc. a money transmitter license in October 2021 and the virtual currency license in February 2022.
Virtual Currency Listing and Self-Certification
There are multiple paths virtual currency businesses can take to list virtual currencies:
- Approval of a specific application to DFS for a material change of business
- Self-certification of a coin listing policy approved by DFS
- Use of virtual currencies already on the Greenlist.
For more information, please see Guidance Regarding Listing of Virtual Currencies.
Regulated entities engaged in Virtual Currency Business Activity may submit to DFS a self-certification policy, pursuant to guidance DFS issued in November 2023. Once DFS approves such a policy and the entity seeks to self-certify a coin for listing or custody, it must submit a self-certification form. Certifications should be submitted via the secure DFS Portal. To access the DFS Portal you will need to create a portal account.
When you first log in, click on Ask for Apps to request access to the Virtual Self-Certification application, for the company(ies) you will be filing for. When this is approved, you will be able to access this application in the My Apps menu.
Any entity licensed or chartered by the New York State Department of Financial Services (the “Department” or “DFS”) to conduct virtual currency business activity in New York (collectively, “VC Entities”) may list coins on the Greenlist without having a separate DFS-approved coin-listing policy. If a VC Entity decides to list a coin on the Greenlist, it must notify DFS at least ten days prior to offering the coin in New York.
*denotes stablecoins approved for issuance in New York by VC Entities
Disclaimer: DFS may, at any time and in its sole discretion, prohibit or otherwise limit a coin’s use before or after a VC Entity begins using a coin; require that any VC Entity delist, halt, or otherwise limit or curtail activity with respect to any coin; remove any coin from the Greenlist; refrain from placing any coin on the Greenlist; or discontinue the Greenlist process entirely. DFS may also update its current self-certification guidance in its sole discretion.
- A person (whether an individual or a company) that engages in Virtual Currency Business Activity requires a BitLicense. Under 23 NYCRR 200.2(q), Virtual Currency Business Activity can fall into one of five types of activities involving New York or New Yorkers:
- receiving Virtual Currency for transmission or transmitting Virtual Currency;
- 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; or
- controlling, administering, or issuing a Virtual Currency.
- No. A consumer who uses Virtual Currency solely for investment purposes does not require a BitLicense. 23 NYCRR 200.3(c).
- No. Merchants and consumers that use Virtual Currency solely for the purchase or sale of goods or services are exempt from the licensing requirement. 23 NYCRR 200.3(c).
- No. Charitable organizations are not exempt.
- No. Merely accepting donations of Virtual Currency does not require a BitLicense.
- In itself, Virtual Currency mining does not require a BitLicense. However, other Virtual Currency-related activities in which a miner engages may require a BitLicense.
- Merely selling the coins you have mined, in a private, non-commercial transaction, does not require a BitLicense. However, other Virtual Currency-related activities that a miner engages in may require a BitLicense.
Under the regulation, the development and dissemination of software (as a purely technical service) in and of itself does not require a BitLicense. 23 NYCRR 200.2(q). The use of your product or service, however, may involve licensable Virtual Currency Business Activity.
As an example, writing software that allows customers to self-custody Virtual Currency in a wallet would not, in and of itself, require a BitLicense. However, building a wallet service in which you kept custody of other people’s funds on their behalf likely would require a BitLicense.
- No. Merely providing advice on buying or selling Virtual Currency does not require a BitLicense.
- In some cases, it may. The BitLicense allows a company to conduct Virtual Currency Business Activity involving New York or a New York Resident, but it does not replace any other licenses required under New York law. For example, many BitLicensees engage in the transmission of fiat currency (e.g., U.S. dollars), which requires them to hold a money transmission license under New York Banking Law Article 13-B.
- Yes. The fact that a company is registered with FinCEN does not affect whether the company requires a BitLicense.
- Yes. A business that is chartered under the New York Banking Law (for example, a New York State limited purpose trust company or a New York State bank) can engage in Virtual Currency Business Activity without a BitLicense if it has received the Superintendent’s approval to do so. Further information about limited purpose trust companies can be found here.
- While these forms of authorization are similar in many respects, a New York state limited purpose trust company charter may provide some additional benefits. For example, a limited purpose trust company can exercise fiduciary powers, while a BitLicensee cannot. 23 NYCRR 200.3(a). In addition, a limited purpose trust company can engage in money transmission in New York without obtaining a separate New York money transmitter license.
- BitLicense applications are submitted through the Nationwide Multistate Licensing System, or NMLS. Please see the application instructions at the NMLS website, on the “NY Virtual Currency Business Activity License New Application Checklist (Company).”
- Completion times vary, but DFS has observed that most delays are a result of submitting an application with one or more elements missing. DFS has published guidance for applicants on the specific documents and information required for an application to be ready for substantive review. DFS will not begin its substantive review of an application until it is informationally complete – all documents and information must have been submitted or provided and must appear to be responsive and comprehensive in terms of organization, clarity, level of detail, and tailoring based on the applicant’s specific business and operations.
- The BitLicense regulation lays out the requirements for capitalization. See 23 NYCRR 200.8. The capitalization determination may vary depending on business model and risk.
- Yes. There is a requirement to either obtain a surety bond, or to fund an account, for the protection of the BitLicensee’s customers. 23 NYCRR 200.9(a). Generally, the minimum amount of this bond or account is $500,000, although that figure can increase based upon the specifics of the BitLicensee’s business model.
- A BitLicensee may offer or use any of the following coins:
- Coins that DFS has specifically approved for the BitLicensee;
- Coins for which the BitLicensee has self-certified to DFS that their use is in compliance with the BitLicensee’s DFS-approved coin listing policy; and
- Coins that are on the DFS Greenlist, which can be found here.
- Please reference the General Framework for Greenlist Coins for additional information regarding the Greenlist.
- While the answer will depend on the specifics of the coin, many coins that are commonly referred to as “stablecoins” are considered to be Virtual Currencies under 23 NYCRR Part 200, and therefore their use would require licensure and self-certification, Greenlisting, or specific DFS approval with respect to any Virtual Currency Business Activity.
- Yes. A business must obtain a BitLicense if it engages in Virtual Currency Business Activity involving New York State or any person that resides, is located, has a place of business, or is conducting business in New York State.
Regulation and History
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:
- 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;
- 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; or
- controlling, administering or issuing a Virtual Currency.”
For licensing requirements see 23 NYCRR Part 200.
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:
- 2020 – Upon the 5-year anniversary of the BitLicense regulation, DFS releases new guidance and resources for virtual currency applicants and current licensed entities
- 2019 – DFS releases the proposed coin-listing policy framework to enhance efficiency of coin-listing process and opens public comment period
- 2015 – DFS revises draft BitLicense regulations and on June 24, the BitLicense regulation goes into effect
- 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
- 2013 – DFS begins receiving virtual currency applications for Money Transmitter Licenses