Virtual Currency Business Licensing in New York: A Complete Guide

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The New York State Department of Financial Services (DFS) has long been at the forefront of regulating digital assets in the United States. Since the introduction of the BitLicense framework in 2015, New York has established itself as a leader in forward-thinking virtual currency regulation. This guide provides a comprehensive overview of how businesses can legally operate in the state’s digital asset ecosystem, including licensing pathways, application procedures, compliance requirements, and frequently asked questions.

Understanding Virtual Currency Business Activity

Under 23 NYCRR Part 200, any entity engaging in virtual currency business activity involving New York or its residents must obtain regulatory authorization. The regulation defines Virtual Currency Business Activity as one or more of the following:

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This means that companies offering crypto wallets with custodial services, exchanges, custodians, or payment processors dealing with digital assets must comply with DFS requirements.

Licensing Options: BitLicense vs. Limited Purpose Trust Charter

Businesses seeking to operate in New York have two primary pathways:

1. BitLicense

The BitLicense is a specialized license issued under 23 NYCRR Part 200. It authorizes entities to conduct virtual currency business activities but does not grant banking powers or fiduciary rights.

2. Limited Purpose Trust Company Charter

Issued under the New York Banking Law, this charter allows entities to act as state-chartered trust companies. Key advantages include:

Entities like Gemini, Paxos, and Fidelity Digital Assets have chosen the trust charter route for these benefits.

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The Application Process: Step by Step

All BitLicense applications are managed through the Nationwide Multistate Licensing System and Registry (NMLS) — a centralized platform used by state regulators.

Step 1: Set Up an NMLS Account

Step 2: Prepare a Substantially Complete Application

The NY Virtual Currency Business Activity License New Application Checklist is essential. Missing any required item is the most common cause of delays.

Key components include:

Important: An application will not enter substantive review until it is fully complete — all documents, fees, and information must be submitted and appear organizationally sound and detailed.

Step 3: Submit and Track Your Application

Once submitted, you’ll receive an NMLS Identification Number, which serves as your official reference throughout the process. Include this number on all hard-copy submissions.

DFS may request additional documentation during review. Applicants are encouraged to contact the DFS Virtual Currency Unit at [email protected] for guidance. In some cases, DFS may schedule a pre-application meeting to clarify complex aspects.

Compliance Framework and Ongoing Requirements

Holding a license comes with continuous obligations:

Capital and Surety Requirements

Cybersecurity

All regulated entities must comply with DFS Cybersecurity Regulation 500, which mandates:

Transaction Monitoring

Pursuant to Part 504, entities must implement robust transaction monitoring and filtering programs to detect suspicious activity and enforce sanctions compliance.

Coin Listing and Greenlist Policy

DFS provides three avenues for listing new virtual currencies:

  1. Specific DFS Approval – Submit a material change application
  2. Self-Certification – Use an approved internal coin listing policy
  3. Greenlist Utilization – List any coin already on the DFS Greenlist

What Is the Greenlist?

The Greenlist includes pre-approved virtual currencies that licensed entities can offer without prior DFS review. As of 2025, approved coins include:

Stablecoins marked with an asterisk (*) are authorized for issuance by DFS-regulated entities.

Note: DFS retains full discretion to remove coins from the Greenlist or halt their use at any time.

To self-certify a new coin, entities must:

Frequently Asked Questions (FAQs)

Who needs a BitLicense?

Any individual or company conducting virtual currency business activity involving New York or its residents must obtain a license. This includes exchanges, custodians, transmitters, and issuers.

Do merchants need a license to accept crypto payments?

No. Businesses accepting virtual currency solely for goods or services are exempt.

Can software developers operate without a license?

Yes. Developing and distributing blockchain tools or wallets does not require a BitLicense — unless the developer also holds custody of user funds.

Is mining considered a licensable activity?

Mining itself does not require a license. However, selling mined coins commercially or providing related financial services may trigger licensing obligations.

Does a company need both a BitLicense and a money transmitter license?

Often, yes. The BitLicense covers virtual currency activities but does not replace the need for a New York money transmitter license if fiat transmission is involved.

Can out-of-state companies operate without a BitLicense?

No. Any business interacting with New York residents or conducting business in-state must be licensed, regardless of physical location.

Key Regulated Entities (As of 2025)

Notable licensed entities include:

These approvals reflect DFS’s ongoing commitment to balancing innovation with consumer protection.

Conclusion

New York’s virtual currency licensing regime remains one of the most influential in the world. Whether pursuing a BitLicense or a limited purpose trust charter, businesses must prepare thoroughly, maintain robust compliance systems, and stay aligned with evolving regulatory expectations.

Staying informed and proactive is key to navigating this dynamic space successfully.

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