BitLicense

A BitLicense is the common term used for a business license of virtual currency activities, issued by the New York State Department of Financial Services (NYSDFS) under regulations designed for companies.[1][2][3] The regulations are limited to activities involving the state of New York or a New York resident. People residing in, located in, having a place of business in, or conducting business in the State of New York count as New York Residents under these regulations.[4] The license was introduced and designed by Benjamin Lawsky, New York's first Superintendent of Financial Services, in July 2014.[5]. Chartered entities do not require an explicit BitLicense, but may instead proceed with virtual currency activities via limited purpose trust charters approved by the NYDFS.[6]

Overview

The regulations define virtual currency business activity as any one of the following types of activities:

  • 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 of virtual currency;
  • storing, holding, or maintaining custody or control of virtual currency on behalf of others;
  • buying and selling virtual currency as a customer business;
  • performing Exchange Services as a customer business, or;
  • controlling, administering, or issuing a virtual currency.

The two following activities are excluded from the definition of virtual currency business activity:

  • development and dissemination of software in and of itself;
  • merchants and consumers that utilize virtual currency solely for the purchase or sale of goods or services or for investment purposes.[4]

History

On July 17, 2014, the department released details on a proposed "BitLicense", which places regulations on any company or person that uses cryptocurrencies residing in New York.[7][8] The proposed regulations were officially published in the New York State Register on July 23, beginning a 45-day comment period.[9][7] On February 25, 2015, a revised proposal notice was published, beginning another 30-day comment period.[10]

It came into effect on August 8, 2015. At least ten[11] bitcoin companies announced they were stopping all business in New York State because of the new regulations.[12][13] The New York Business Journal called this the "Great Bitcoin Exodus".[12]

In September 2015, Boston-based Circle was granted the first BitLicense, although in December 2016 the company had pivoted away from its bitcoin exchange to focus more on payments.[14][15][16][17][18]

Two virtual currency limited purpose trust company charters were approved by the NYDFS in 2015, the first in May 2015 to itBit, now Paxos Trust Company, and the second charter in October 2015 to Gemini.[19]

In October 2015, an article 78 was filed in the Supreme Court of the State of New York challenging the authority of the New York State Department of Financial Services to define virtual currency.[20] Justice St George heard the case on October 10, 2017[21] and dismissed the case on December 27, 2017[22] The case is currently on appeal.[23]

In July 2016, San Francisco-based Ripple was awarded the second BitLicense.[18]

In January 2017, San Francisco-based Coinbase, one of the most heavily funded startups in the Bitcoin industry, was awarded the third BitLicense.[18]

In November 2017, Tokyo based bitFlyer was awarded the fourth BitLicense[24] and Genesis Global Trading was awarded the fifth BitLicense in May 2018[25].

In June 2018, Hong Kong based Xapo was awarded the sixth BitLicense[26] and Square Inc. was awarded the seventh BitLicense[27].

BitPay was awarded the eighth BitLicense in July 2018[28].

In November 2018, Texas-based Coinsource, an operator of Bitcoin Teller Machines, was awarded the twelfth virtual currency license or charter[29].

In January 2019, Robinhood Crypto LLC, a subsidiary of Robinhood Markets Inc., and Moon Inc., dba LibertyX were awarded the BitLicense [30].

References

[31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44]

  1. ^ Michael J. Casey (3 June 2015). "NY Financial Regulator Lawsky Releases Final BitLicense Rules for Bitcoin Firms". WSJ.
  2. ^ "New York lays out requirements for a 'BitLicense'". Fast FT.
  3. ^ Kaja Whitehouse, USAToday (3 June 2015). "'Bitlicense' rules regulating bitcoin released". USA TODAY.
  4. ^ a b "Regulations of the Superintendent of Financial Services, part 200: virtual currencies" (PDF). Department of Financial Services. Retrieved April 13, 2017.
  5. ^ Jose Pagliery, CNN (18 July 2014). "'New York unveils Bitcoin license rules'". CNN.
  6. ^ "BitLicense Frequently Asked Questions". www.dfs.ny.gov. Retrieved 2018-11-06.
  7. ^ a b New York State Department of Financial Services (July 17, 2014). "NYDFS Releases Proposed BitLicense Regulatory Framework for Virtual Currency Firms" (Press release). Archived from the original on 2014-09-23. Retrieved July 19, 2014.
  8. ^ Santori, Marco (July 18, 2014). "What New York's Proposed Regulations Mean for Bitcoin Businesses". CoinDesk. Retrieved July 19, 2014.
  9. ^ New York State Register, Vol. XXXVI, Issue 23 (July 23, 2014), pp. 14-16. Rulemaking I.D. No. DFS-29-14-00015-P.
  10. ^ New York State Register, Vol. XXXVII, Issue 8 (February 25, 2015), pp. 17-18. Rulemaking I.D. No. DFS-29-14-00015-RP.
  11. ^ Roberts, Daniel. "Behind the "exodus" of bitcoin startups from New York". Fortune. Retrieved 10 October 2016.
  12. ^ a b Michael del Castillo (August 12, 2015). "The 'Great Bitcoin Exodus' has totally changed New York's bitcoin ecosystem". New York Business Journal.
  13. ^ "Bitcoin company ditches New York, blaming new regulations". Fortune. June 11, 2015.
  14. ^ Paul Vigna (Sep 22, 2015). "Circle Gets First 'BitLicense,' Releases CirclePay, New Service". WSJ.
  15. ^ Karen Freifeld (September 22, 2015). "NY regulator issues first license for bitcoin company". Reuters.
  16. ^ Curt Woodward (September 22, 2015). "Circle gets first bitcoin license from New York regulators". betaboston.com.
  17. ^ NYDFS (September 22, 2015). "Press Release - NYDFS Announces Approval of first BitLicense application from a virtual currency firm". ny.gov.
  18. ^ a b c "Bitcoin Exchange Coinbase Receives New York BitLicense - CoinDesk". CoinDesk. 2017-01-17. Retrieved 2017-02-02.
  19. ^ "DFS CONTINUES TO FOSTER RESPONSIBLE GROWTH IN NEW YORK'S FINTECH INDUSTRY WITH NEW VIRTUAL CURRENCY PRODUCT APPROVALS". www.dfs.ny.gov. Retrieved 2018-11-06.
  20. ^ "Article 78 against NYDFS". Archived from the original on 2016-11-07. Retrieved 2016-11-06.
  21. ^ "New York State Supreme Court Hearing Transcript" (PDF). Archived from the original (PDF) on 2017-10-31.
  22. ^ "Judge Dismisses Long-Shot Bid to Overturn New York Bitcoin Regulation". Coindesk. 3 January 2018.
  23. ^ "Theo Chino's Fight to Overturn the Controversial BitLicense". Bitsonline. 14 May 2018.
  24. ^ "DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITFLYER USA, INC". www.dfs.ny.gov. Retrieved 2018-11-06.
  25. ^ www.dfs.ny.gov CONTINUES ACTIONS TO SUPPORT RESPONSIBLE INNOVATION IN NEW YORK’S FINTECH INDUSTRY https://www.dfs.ny.gov/about/press/pr1805171.htm=DFS CONTINUES ACTIONS TO SUPPORT RESPONSIBLE INNOVATION IN NEW YORK’S FINTECH INDUSTRY Check |url= value (help). Retrieved 2018-11-06. Missing or empty |title= (help)
  26. ^ "June 14, 2018: DFS Continues to Advance Responsible Growth in New York'S Fintech Industry with New Virtual Currency Approvals". www.dfs.ny.gov. Retrieved 2018-06-18.
  27. ^ "June 18, 2018: DFS Grants Virtual Currency License to Square, Inc". www.dfs.ny.gov. Retrieved 2018-06-18.
  28. ^ "July 16, 2018: DFS GRANTS VIRTUAL CURRENCY LICENSE TO BITPAY, INC". www.dfs.ny.gov. Retrieved 2018-11-06.
  29. ^ "November 1, 2018: DFS GRANTS VIRTUAL CURRENCY LICENSE TO COINSOURCE, INC". www.dfs.ny.gov. Retrieved 2018-11-06.
  30. ^ "January 24, 2019: DFS CONTINUES TO ADVANCE RESPONSIBLE INNOVATION IN NEW YORK'S FINTECH INDUSTRY". www.dfs.ny.gov. Retrieved 2019-01-24.
  31. ^ Cameron Fuller (31 January 2014). "Bit Licenses: How Will New York Regulate Bitcoins?". International Business Times.
  32. ^ "Benjamin Lawsky unveils New York's historic BitLicense framework - New York Business Journal". New York Business Journal. 3 June 2015.
  33. ^ "Fmr New York bitcoin watchdog can't help bitcoin startups get license - Fortune". Fortune. June 11, 2015.
  34. ^ Ian McKendry (3 June 2015). "After N.Y. Makes 'BitLicense' Official, Focus Moves to Who's Next". American Banker.
  35. ^ "New York Releases Final BitLicense". CoinDesk.
  36. ^ Michael Bobelian (8 June 2015). "NY's BitLicense Reveals The Difficult Trade-offs Of Regulating Bitcoin". Forbes.
  37. ^ "NYDFS BitLicense Draft - Business Insider". Business Insider. 17 July 2014.
  38. ^ "What BitLicense Regulations Mean for Bitcoin". NASDAQ.com. 10 June 2015.
  39. ^ "New York Outs Final BitLicense For Bitcoin And Other Digital Currency Companies". Tech Times.
  40. ^ "New York Regulator Finalizes First-Of-Its-Kind Plan To Govern Virtual Currency With "BitLicense"". Consumerist.
  41. ^ "UPDATE 2-New York regulator issues final virtual currency rules". Reuters.
  42. ^ Mariella Moon. "New York sets rules for running Bitcoin exchange businesses". Engadget. AOL.
  43. ^ "Companies burdened by BitLicenses real cost - EconoTimes". EconoTimes.
  44. ^ "NYDFS Receives 22 Initial BitLicense Applications". CoinDesk.

External links

Airdrop (cryptocurrency)

An airdrop is a distribution of a cryptocurrency token or coin, usually for free, to a large number of wallet addresses. Airdrops are primarily implemented as a way of gaining attention and new followers, resulting in a larger user-base and a wider disbursement of coins.

Circle (company)

Circle is a peer-to-peer payments technology company. It was founded by Jeremy Allaire and Sean Neville in October 2013. Circle's mobile payment platform, Circle Pay, allows users to hold, send, and receive traditional fiat currencies . In September 2015, Circle received the first BitLicense issued from the New York State Department of Financial Services. In April 2016, the British government approved the first virtual currency licensure to Circle. Circle is headquartered in Boston, Massachusetts.Up until December 2016, Circle Pay also operated as a bitcoin wallet service to buy and sell bitcoins. It has since ceased to provide such service, claiming the company "is now more than ever not a consumer bitcoin exchange, and will continue to focus resources on global social payments and future next-generation blockchain technology". Circle has launched a Bitcoin Blockchain-based remittance and messaging application to serve the unbanked.

Coinbase

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CryptoNote

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Dash (cryptocurrency)

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Distributed ledger

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Ethash

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Filecoin

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Gridcoin

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List of bitcoin companies

This is a list of Wikipedia articles about for-profit companies with notable commercial activities related to bitcoin. Common services are wallet providers, bitcoin exchanges, payment service providers and venture capital. Other services include mining pools, cloud mining, peer-to-peer lending, exchange-traded funds, over-the-counter trading, gambling, micropayments, affiliates and prediction markets.

Litecoin

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LocalBitcoins

LocalBitcoins is a bitcoin startup company based in Helsinki, Finland. Its service facilitates over-the-counter trading of local currency for bitcoins. Users post advertisements on the website, where they state exchange rates and payment methods for buying or selling bitcoins.

Other users reply to these advertisements and agree to meet the person to buy bitcoins with cash or pay with online banking. LocalBitcoins has a reputation and feedback mechanism for users and an escrow and conflict resolution service. As of December 2013, LocalBitcoins has around 110,000 active traders with a trade volume of 1,400–3,000 bitcoins per day.

Marcia Hofmann

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Namecoin

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Other proposed use cases of Namecoin include notary/timestamp systems.Namecoin uses the Proof of Work (PoW) consensus system called "Merged mining", a process which reuses partial solutions to PoW problems from a parent cryptocurrency as valid proofs-of-work for a child cryptocurrency.

New York State Department of Financial Services

The New York State Department of Financial Services (DFS or NYSDFS) is the department of the New York state government responsible for regulating financial services and products, including those subject to the New York insurance, banking and financial services laws.

NuBits

NuBits is a cryptocurrency which advertises itself as a stablecoin issued by a DAO under the same name. Shareholders achieve stability in NuBits by placing buy and sell orders at $1.00 using revenue from NuBit sales kept in external digital currencies (such as Bitcoin).NuBits attempts to keep price stability by distributing voting shares (NuShares), which have the ability to vote on motions and network changes. Holders of NuShares earn rewards as an incentive to stabilize the network. Partial revenue is distributed to shareholders to create a mechanism for deep backing by incentive for investment when NuBits leaving circulation exceed the value of Nu's liquidity reserve. Additionally, holders of NuBits have the ability to lock away NuBits to gain interest (from Nu's reserves), which in turn reduces the circulating supply.As of March 18th, 2018, NuBits has decoupled from its $1.00 price and has not been able to maintain a stable peg against the US dollar, trading at $0.35 as of June 2018.

ShapeShift

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Steemit

Steemit is a blogging and social networking website owned by Steemit Inc that uses the Steem blockchain to reward publishers and curators.On July 4, 2016, Steemit, Inc. launched Steemit, a social media platform with virtual currency rewards that runs over the Steem blockchain. On July 14, 2016, Steemit announced on their website that they were hacked. The attack, according to them, has compromised about 260 accounts. About US$85,000 worth of Steem Dollars and Steem are reported to have been taken by the attackers.

Steemit gives small amounts of its cryptocurrency token, Steem, to posters who get upvotes. Posters can also be tipped by readers. Steemit faced financial difficulties in 2018 and laid off 70% of its staff. Steemit co-founder Ned Scott referred to the Steemit blogging platform as an interface on top of a blockchain, akin to a blockexplorer.

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