Does your firm need a BitLicense?
On July 17, 2014, New York State Department of Financial Services has issued for public comment a proposed “BitLicense” regulatory framework for New York virtual currency businesses.
The new DFS BitLicenses will be required for firms engaged in the following virtual currency businesses:
- Receiving or transmitting virtual currency on behalf of consumers;
- Securing, storing, or maintaining custody or control of such virtual currency on the behalf of customers;
- Performing retail conversion services, including the conversion or exchange of Fiat Currency or other value into Virtual Currency, the conversion or exchange of Virtual Currency into Fiat Currency or other value, or the conversion or exchange of one form of Virtual Currency into another form of Virtual Currency;
- Buying and selling Virtual Currency as a customer business (as distinct from personal use); or
- Controlling, administering, or issuing a Virtual Currency. (Note: This does not refer to virtual currency miners.)
The license is not required for merchants or consumers that utilize Virtual Currency solely for the purchase or sale of goods or services; or those firms chartered under the New York Banking Law to conduct exchange services and are approved by DFS to engage in Virtual Currency business activity.
For key requirements for firms holding BitLicenses and Bitcoin federal income tax questions, please contact your Trusted Tax Advisor at Capital Protection Alliance