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.

Quick Links

• 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

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.

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)

Updated: April 25, 2023

*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.

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.

Self-Certification

Regulated entities engaged in Virtual Currency Business Activity may submit to DFS a self-certification policy, pursuant to guidance DFS issued in September 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.

• Instructions: Creating a DFS 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.

DFS Portal

Greenlisted Coins

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.

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:

• 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