The New York Department of Financial Services (“DFS”) released a draft proposal for licensing and regulating virtual currency businesses like Bitcoin. The proposed “BitLicense” regulatory framework contains consumer protection, anti-money laundering compliance, and cybersecurity rules tailored for virtual currency firms.
The new DFS BitLicenses would be required for firms engaged in virtual currency businesses including:
- receiving or transmitting virtual currency on behalf of consumers;
- securing, storing, or maintaining custody or control of such virtual currency on the behalf of customers;
- performing retail conversion services, including the conversion or exchange of fiat currency or other value into virtual currency, the conversion or exchange of virtual currency into fiat currency or other value, or the conversion or exchange of one form of virtual currency into another form of virtual currency;
- buying and selling virtual currency as a customer business (as distinct from personal use); or
- controlling, administering, or issuing a virtual currency.
See: NY DFS Proposed Regulations; NY DFS Press Release.