What are BitLicense and Its Requirements?

Virtual currencies, digital asset-focused funds, and fund managers in the age of constantly evolving and growing securities regulation at the federal level, the state is not only trying to fit in but through guidance, estimates that would be faced with new challenges proactively. regulations. the compliance of legal counsel of the funds to sustain in the long term Bitcoin and other digital assets in the form of investors, themselves, in addition to the already complicated process of fundraising and Investment Management, find themselves at a significant disadvantage, having to navigate through a series of complex rules.

On June 3, 2015, the New York Department of Financial Services released proposed regulatory guidance for virtual currency businesses operating in New York State, known as BitLicense. The proposed arrangements are available here.

The main focus of BitLicense is virtual currency firms operating or doing business in the State of New York. These companies include exchanges, custodians, trading platforms, money transfers, and other similar businesses.

The proposed regulations may require all enterprises engaged in certain activities involving virtual currencies to obtain a license, although they do not apply specifically to funds or private trusts that invest only in virtual currencies (except for those that hold virtual money on behalf of others). 

BitLicense requirements include:

  1. Application for a license (even if you are not based in New York)
  2. Retention of books and records for transaction histories and other information relating to business activity
  3. Cybersecurity program to protect consumers’ private information from cyber-attacks or hacks
  4. Compliance with anti-money laundering laws
  5. Consumer protections, including the maintenance of a consumer complaint record and compliance with consumer disclosure requirements.