New York Money Transmitter Laws

New York Money Transmitter License and Bitcoin License

Who needs to register?

Under New York statute, those engaging in the business of selling or issuing checks, or receiving money for transmission or transmitting money, must obtain a New York money transmitter license.

New York Bitcoin Law: A Cryptocurreny license, or New York Bitcoin License, ” BitLicense, ” is required to engage in any Virtual currency Business Activity. Bitcoin Money Transmitter License doesn’t grant fiduciary powers, and each Bitcoin Money Transmitter license is prohibited from conducting any Virtual Currency Business Activity through an agent or agency arrangement when the agent doesn’t have a BitLicense.

Who is the regulator?

New York Department of Financial Services Regulates New York Money Transmitter License.

What are the New York money transmitter license requirements?

To apply as a New York money transmitter requires the following fees and documentation:

  • Applicant’s name, address, federal Taxpayer Identification Number, date and place of incorporation.
  • Information regarding history of applicant and business
  • Information regarding principal officers, directors, and 10% equity security owners
  • Information regarding operations, including the jurisdictions in which the applicant proposes to operate, the mode of operation for conducting transmissions, and a written submission of the applicant’s general procedures for entering into agency contracts to engage in money transmission in New York
  • An alphabetical listing of agents in New York, showing full names and addresses and assigned identification number
  • A specimen copy of the proposed agency contract between the applicant and its agents
  • Information disclosing any legal proceedings, criminal or civil, brought against the applicant, director, principal officer, or 10% equity security officer
  • Information regarding financial statements for two fiscal years of operation before application
  • Projection for the two years of operation in New York, including quarterly receipts and the expected number of transmissions, a pro forma balance sheet and profit and loss statement of retained earnings
  • Documentation of an anti-money laundering program that complies with federal anti-money laundering laws
  • Fingerprints for every applicable partner, officer, director, stockholder and owner of an applicant for all individuals not currently employed by a licensee
  • Background investigation reports
  • FinCEN registration, confirming registration as a Money Services Business
  • Non-refundable Fee of $3,000 payable to the order of the Superintendent of Financial Services

What are the general bonding requirements?

Bonding requirements for a New York Money Transmitter License are determined by the superintendent, the minimum requirement is $500,000.

  • In making any determination of minimum bond amount, the superintendent may take into account the financial condition of the licensee, the number of locations in this state at which the licensee, either directly or through agents, transacts the business of selling New York instruments or New York traveler’s checks, the controls imposed on such agents, and the possible exposure of purchasers and holders of New York instruments and New York traveler’s checks to loss in the event of the insolvency, bankruptcy or other financial impairment of the licensee.
  • Superintended may modify or dispense with security requirement if superintendent finds that a licensee has transacted the business of money transmission in this state for a period of five (5) consecutive years and that such business has been conducted honestly, efficiently and safely and that the licensee’s financial condition is sound and that its New York instruments are insured.

New York Bitcoin Law and BitLicense

The New York State Department of Financial Services published final rules for New York Bitcoin law and virtual currency business activity (23 NYCRR Part 200 Virtual Currencies) in 2015.
Under these regulations, virtual currency is any type of digital unit used as a medium of exchange or a form of digitally stored value, including digital units of exchange that:

  1. Have a centralized repository or administrator,
  2. Are decentralized and have no centralized repository or administrator, or
  3. May be created or obtained by computing or manufacturing effort.

New York Bitcoin law regulations generally require new financial services and money service businesses to obtain a Bitcoin license, “ BitLicense, ” for businesses handling virtual currency or cryptocurrency transactions. The State of New York Bitcoin Law provides the licensure requirements, including the application process and fees. Bitcoin Licensees must also maintain and enforce written compliance policies. New York Bitcoin Law also contain provisions on such things as consumer protection, anti-money laundering compliance, and cyber security rules for virtual currency companies.

Subject to certain exceptions, anyone engaging in any of the following activities is required to obtain a BitLicense:

  • Virtual currency transmission
  • 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
  • Controlling, administering, or issuing a virtual currency.

Exemption from Bitcoin licensing requirements. Under New York Bitcoin Law, the following Persons are exempt from the BitLicense requirements otherwise applicable:

  1. Persons that are chartered under the New York Banking Law and are approved by the superintendent
    to engage in Virtual Currency Business Activity; and
  2. merchants and consumers that utilize Virtual Currency solely for the purchase or sale of goods or
    services or for investment purposes.

Additional resources:

Transmitters of Money Act

BitLicense Frequently Asked Questions

Disclaimer: Information provided by Shipkevich, PLLC and any of its affiliated web pages is for general educational purposes only, and should not be taken as legal advice.