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OBTAINING NEW YORK BITLICENSE

Summary
Obtaining New York BitLicense
Service Type
Obtaining New York BitLicense
Provider Name
Dilendorf Khurdayan,
60 Broad Street, 24th Floor,New York,New York-10004,
Telephone No.212.457.9797
Area
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Description
Obtaining New York BitLicense | Virtual Currency Business Activity Licenses

Dilendorf & Khurdayan assists in obtaining of Virtual Currency Business Activity Licenses, or BitLicenses, to digital- or cryptocurrency businesses that want to operate in New York or offer their services to New York residents. The BitLicense requirement is an addition to the state’s Money Transmitter License requirement for the businesses involved in transmission of fiat currencies.

Summary
Obtaining New York BitLicense
Service Type
Obtaining New York BitLicense
Provider Name
Dilendorf Khurdayan,
60 Broad Street, 24th Floor,New York,New York-10004,
Telephone No.212.457.9797
Area
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Description
Obtaining New York BitLicense | Virtual Currency Business Activity Licenses

ATTORNEYS' EXPERIENCE

Advised a digital exchange sponsor and developer that launched several digital exchanges in Europe and Middle East on U.S. alternative trading system (ATS) registration, broker-dealer registration, FINRA registration, money transmitter licensing and obtaining New York BitLicense.

Advised a digital accounting and data management provider on obtaining money transmitter licenses and New York BitLicense in relation to incorporating crypto/fiat payment system, crypto/fiat conversion and digital wallet services into their platform.

Advised a decentralized e-commerce platform on obtaining money transmitter and New York BitLicense in relation to their crypto/fiat exchange services and escrow services via integrated smart wallet.

Helping Clients Navigate Through BitLicense Requirements and Challenges

Any person engaging in “virtual currency business activity” involving New York or its residents must obtain a a BitLicense. Pursuant to the rules promulgated by the New York Department of Financial Services (DFS), “virtual currency business activity” includes any one of the following:

(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;

(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.

The term “virtual currency” is construed broadly, means “any type of digital unit that is used as a medium of exchange or a form of digitally stored value,” whether centralized or decentralized, and is synonymous to what is commonly referred to as “cryptocurrency” or “digital currency”. However, mere development and distribution of software does not require a BitLicense.

Thus, transmitting or even holding digital currency may require obtaining and maintaining a NY Bitlicense, which may become an extensive and cumbersome procedure. Even though DFS is obligated to process a BitLicense application within 90 days after the filing is complete, this period may be extended in DFS’ discretion and include requests for additional information. DFS may also grant conditional BitLicenses in its discretion.

In a modernization effort, DFS now allows companies applying for, updating or maintaining BitLicenses to submit most of the documents online – utilizing the Nationwide Multistate Licensing System and Registry (NMLS). A company is not required to provide redundant information if it is applying for both NY BitLicense and Money Transmitter License.

Still, obtaining a BitLicense is a serious undertaking that will involve costs and resources related to the application and ongoing compliance, including minimal capital requirements, surety bond or trust account and full reserves.

Guiding Clients Through NY BitLicense Application Process

Our lawyers advise and guide clients throughout the BitLicense application process, which requires clients’ cooperation in providing the detailed information about the company, its owners, officers, business plan and operations to DFS for the most efficient processing, including:

  • Information about directors, principal officers, principal stockholders and principal beneficiaries;
  • Formation documents and good standing certificate;
  • Organizational chart;
  • Surety bond;
  • Description of the proposed, current, and historical business of the applicant;
  • Description of products and fee schedule;
  • Explanation of the methodology used to calculate the value of virtual currency in fiat currency;
  • Specimen form of all agreements, documents, receipts and disclosures that the applicant plans to issue or use with NY customers;
  • Copies of any other agreements the applicant has entered into (or will enter into) in connection with the virtual currency business activity;
  • Flow of funds structure;
  • Corporate and personal financial statements;
  • Affidavits and questionnaires;
  • AML procedures, cybersecurity programs and other company staffing and internal policies;
  • Fingerprints;
  • Background investigation reports;
  • Etc.

A company with an existing BitLicense will be subject to an ongoing reporting and should also consult with a legal counsel when it adds a new product, service or activity to its business or in the case of a change in control because a material change in the business or ownership may require a written approval from DFS.

Resources for Obtaining NY BitLicense:

 

Summary
Obtaining New York BitLicense
Service Type
Obtaining New York BitLicense
Provider Name
Dilendorf Khurdayan,
60 Broad Street, 24th Floor,New York,New York-10004,
Telephone No.212.457.9797
Area
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Description
Obtaining New York BitLicense | Virtual Currency Business Activity Licenses

For more information about obtaining a New York BitLicense,

please contact Dilendorf & Khurdayan by sending an email or calling us at 212.457.9797.

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