A BitLicense is a business license issued by the New York State Department of Financial Services to companies seeking to engage in activities involving virtual currencies within the state of New York. The license regulates and is legally required for participation in the following activities:
- Receiving, transmitting, securing or maintain control of virtual currency on behalf of customers.
- Performing exchange services.
- Trading virtual currency for reasons other than personal use.
- Controlling, administering or issuing a virtual currency.
The regulations, however, do not apply to businesses simply utilizing cryptocurrencies in the purchase or sale of goods or services. A BitLicense is also not required to engage in the ‘mining’ of virtual currencies.
New York regulators developed the BitLicense in response to the collapse of the Mt. Gox exchange in 2013 and the regulations went into effect in August 2015. As of June 2019, only eighteen BitLicenses have been granted and several cryptocurrency firms have ceased operations in New York citing the burdens of obtaining and maintaining a BitLicense.