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New York Cryptocurrency Compliance 

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New York Cryptocurrency Compliance

New York is not only the financial center of the United States, but also one of the most notable financial centers in the world. As such, it’s no surprise that it has a series of strict financial regulations for money-handling businesses, including cryptocurrency regulations. In 2015, the New York State Department of Financial Services (DFS) codified a cryptocurrency regulation known as BitLicense. The following explains the BitLicense regulation and requirements. For help from a New York cryptocurrency compliance specialist, reach out to Bates Group LLC directly today. 

What Is a BitLicense?

As explained by the New York State Department of Financial Services, a BitLicense is required for businesses engaging in virtual currency businesses. Essentially, a BitLicense is simply a business license that applies to virtual currency activities. The license is issued by the DFS, and those companies that hold a BitLicense are subject to certain regulations. 

Who Is Required to Carry a BitLicense?

A BitLicense is required for any individual or company that engages in virtual currency business activity in New York or involving New Yorkers, which may fall into one of five categories: 

  1. Receiving virtual currency or transmitting virtual currency
  2. Storing or holding virtual currency on the behalf of another party
  3. Buying and selling virtual currency as a customer business
  4. Acting as a customer business to perform exchange services
  5. Administering, controlling, or issuing a virtual currency

If your business engages in any of the above activities, it is required to obtain a BitLicense. 

Requirements Under New York Crypto Regulations

Companies who are required to carry a BitLicense and engage in activities involving virtual currencies are required to comply with multiple requirements, including:

  • Consumer protection cybersecurity. There are numerous cybersecurity and consumer protection laws in New York and at the federal level. Cybersecurity requirements for financial services companies can be found in New York Codes, Rules and Regulations, Title 23, Chapter 1, Part 500.
  • Know Your Customer laws. Know Your Customer, also referred to as Know Your Client or KYC laws, refer to a set of standards that are used to verify clients’ risk tolerance and financial profile, ensure that broker-dealers use reasonable effort when managing client accounts, and requires that new clients provide detailed financial information before opening accounts. Throughout the U.S., cryptocurrency businesses are not required to adopt KYC standards under federal law. 
  • Anti-Money Laundering compliance. Money-handling financial businesses are required to comply with the Bank Secrecy Act and anti-money laundering compliance regulations, which require firms to adopt and test compliance programs. 

Get Help with New York Cryptocurrency Compliance

If you are a financial services business that engages in activities involving cryptocurrency, it is important that you are acting in compliance with New York’s BitLicense requirements, as well as other state and federal compliance requirements. At Bates Group LLC, our consultants specialize in New York cryptocurrency compliance. To learn more about how our firm can help to ensure yours is acting within regulations, please reach out to us directly by phone or online to get started. 

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