Virtual Currency Business License or BitLicenses

To conduct virtual currency business in New York State, entities may apply for a BitLicense or articles of association under the New York Banking Law (for example, as a New York State Trust Company or a New York State Bank). York) with permission to conduct a virtual currency business.

In June 2015, the New York State Department of Financial Services issued Virtual Currency Rule 23 NYCRR Part 200 under the New York Financial Services Act. Since then, under this ruling, obtaining a BitLicense has been a regulated way to access New York’s virtual currency market, which remains the center of US technological innovation.

If your digital asset fund will operate from New York or will accept capital from New York investors, we recommend that you pay attention to several very important points regarding the preparation of documents, capital requirements and marketing-related issues. Finance Business Service’s legal team is fully equipped to provide legal assistance during the application process and prepare all necessary documentation.

Before preparing documents and submitting an application, you must clearly understand that your company’s activities will be directly related to virtual currency and will correspond to one of five areas:

• receiving virtual currency for transfer or transfer of virtual currency;
• holding, holding or maintaining virtual currency or controlling it on behalf of others;
• buying and selling virtual currency as a client’s business;
• provision of exchange services as a client;
• control, administration or issuance of virtual currency.

• ✔ Requirements for information that is submitted in the application:

There are several documents that an applicant is required to provide during the BitLicense application process.

The application for a license must be submitted in writing and must contain very detailed information about the company, structure, list and detailed biographical data of each individual applicant and each director, chief officer, major shareholder and major beneficiary, background report prepared by an independent investigative agency for each individual applicant and each chief officer, the current financial statements of the applicant and each chief officer, as well as the projected balance sheet and income statement for the next year of the applicant’s activity, explanations of the methodology used to calculate the value of virtual currency in fiat currency; and any other additional information the Superintendent may require.

• ✔ Capital requirements:

There is currently no minimum amount set. The Superintendent conducts an assessment of the financial standing of the licensee. The determination of financial integrity includes several factors such as the licensee’s total assets and total liabilities, the expected volume of virtual currency activity, the amount of leverage used, liquid positions, the types of products or services that will be offered, among many other variables. Ultimately, the superintendent is responsible for evaluating whether the totality of all the information collected would consider the capital requirement to be met.

• ✔ Marketing requirements:

If you have been authorized to obtain a BitLicense, there are advertising and marketing compliance requirements. The company must follow, in addition to the already established rules of the SEC, the established rules for private funds.

Licensees must tailor their advertising and marketing to protect consumer interests by disclosing all risks associated with their products and services prior to a transaction. They must also display the phrase “Licensed by the New York State Department of Financial Services to conduct virtual currency business.”

• ✔ Requirements for applicants:

The license holder must maintain a certain amount of assets in order to ensure financial stability and continue operations. This amount is determined by the Superintendent of NYDFS, who reviews the company’s records and terms, and has a security bond or US dollar trust account to protect clients’ assets and funds. The NYDFS Superintendent also determines the amount.

The company must maintain records, ledgers and other similar documentation for at least 7 years on all accounts or transactions. In addition, they must be prepared to provide them to the NYDFS at any time, as well as provide financial statements and audited financial disclosures. The main purpose is to check finances and practices to determine if the license holder is in good financial condition and has complied with all regulations.

It is necessary to implement anti-money laundering and cyber security programs, which means the introduction of a KYC program and the appointment of a director of information security. Licensees must report fraudulent transactions, breaches, and data breaches to NYDFS when they occur.

BitLicense holders, both conditional and full, are allowed to perform a full range of financial activities in New York and receive approval confirming the trust of investors and clients of the crypto company.

Finance Business Service lawyers will provide full and detailed advice by studying your business and will accompany you throughout the entire process of applying for and receiving BitLicense applications, which requires cooperation in providing detailed information about the company, its owners, employees, business plan and DFS operations for the most effective processing.