Out-Law News 1 min. read

New York regulator issues first virtual currency licence

A US financial services regulator has issued its first licence since setting up a new framework for regulating the exchange of bitcoin and other virtual currencies earlier this year.

The New York State's Department of Financial Services (NYDFS) said it had approved Circle Internet Financial's application for a new 'BitLicense'. The regulator said it is currently considering a further 25 BitLicense applications from companies.

"Issuing the first BitLicense is an important milestone in the long-term development of the virtual currency industry," Anthony Albanese, acting superintendent of financial services at the NYDFS. "Putting in place rules of the road that help protect consumers from loss or theft and root out illicit activity is vital to building trust in this new financial technology. We will continue to move forward on evaluating and approving additional BitLicenses."

Companies involved in 'virtual currency business activity' need a licence to operate in New York State. This includes companies that transmit virtual currency for financial purposes where the transfers involve more than a nominal amount of virtual currency. Businesses that store or control virtual currency on behalf of others, trade virtual currency as a customer business or act as a virtual currency exchange are also among those subject to the licensing requirement.

Under the licensing regime (44-page / 84KB PDF), companies involved in virtual currency activities have a number of regulatory responsibilities. Responsibilities revolve around issues such as anti-fraud and anti-money laundering initiatives, cyber security, privacy and information security, and licensees must also abide by other rules on financial disclosures, advertising and marketing, business continuity and complaints handling.

The UK government previously outlined plans to require operators of virtual currency trading platforms to carry out anti-money laundering checks in future.

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