How Will BitLicense Pan out for New York?

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BitLicense has been there on the news for a while now and recently the outgoing superintendent of New York State Department of Financial Services (NYSDFS) announced the final version of the BitLicense. By finalizing the BitLicense after almost a year of deliberations and amendments, NY became the first State in the United States to regulate cryptocurrency based businesses. Once the BitLicense regulations come into effect in full force, any Bitcoin or digital currency related business wishing to set shop in the State of New York would have to gain approval from the NYSDFS after meeting all the requirements as stated by the regulations.

What does BitLicense require from companies?

The initial draft of BitLicense was introduced in July 2014, and since then it has undergone some amendments to become what it is now. The initial draft was heavily criticized for being too stringent, up to an extent that it could smother the upcoming digital currency industry to death. The authorities made amendments to address the issues raised about it and in the end, only few of these issues were resolved.

BitLicense, takes inspiration from the State’s existing money transmitter laws but with additional riders. The inclusion of anti-money laundering, cybersecurity, information technology requirements and reviews has made the regulatory requirements of BitLicense much tougher than the federal requirements applicable to banks (without any consideration to the fact that most of the Bitcoin/digital currency based companies are fresh start-ups, not big corporations that run banks).

Apart from the long list of documentation, affidavits, clearance from law enforcement and judiciary and other information about all stakeholder and directors, the compliance requires wallet and financial services providers to collect identification of each customer and record each transaction that happens through their platform. The company is required to collect information from

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