Virtual Currency Business Licensing in New York: A Complete Guide

·

The New York State Department of Financial Services (DFS) has long been a pioneer in regulating digital assets, establishing one of the first comprehensive frameworks for virtual currency businesses in the United States. Since the implementation of 23 NYCRR Part 200—commonly known as the BitLicense regulation—New York has maintained a balanced approach to innovation and consumer protection.

This guide provides a detailed overview of how businesses can legally operate in New York’s virtual currency ecosystem, covering licensing pathways, application procedures, compliance requirements, and recent regulatory developments.

Understanding Virtual Currency Business Activity

Under 23 NYCRR 200.2(q), "Virtual Currency Business Activity" includes any of the following actions involving New York or its residents:

  1. Receiving or transmitting virtual currency (excluding non-financial, nominal-value transactions)
  2. Storing, holding, or maintaining custody of virtual currency on behalf of others
  3. Buying and selling virtual currency as part of a customer-facing business
  4. Performing exchange services for customers
  5. Controlling, administering, or issuing a virtual currency

Any individual or entity engaging in these activities must obtain proper authorization from DFS—either through a BitLicense or a limited purpose trust company charter.

👉 Discover how to launch your compliant crypto venture today.

BitLicense vs. Limited Purpose Trust Charter

Businesses operating in New York have two primary regulatory pathways:

BitLicense

Limited Purpose Trust Company Charter

While both frameworks ensure compliance with state regulations, the trust charter offers broader operational flexibility—making it a strategic choice for firms aiming to provide institutional-grade services.

The VOLT Initiative: Modernizing Regulation

To improve efficiency and transparency, DFS launched VOLT (Vision, Operations, Leadership, Technology)—a transformation program focused on streamlining the licensing process.

Key components include:

This initiative reflects DFS’s commitment to balancing rigorous oversight with support for innovation.

How to Apply for a BitLicense

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

Step-by-Step Application Process

  1. Create an NMLS Company Account

    • Submit the Company Account Request Form
    • Designate a Primary and Secondary Account Administrator
    • Receive login credentials within three business days

  2. Prepare Required Documentation

  3. Submit a Substantially Complete Application

    • DFS will not begin substantive review until all documents, fees, and information are submitted
    • Incomplete applications are the leading cause of delays—and may result in denial

  4. Respond to DFS Inquiries

    • DFS may request additional details during review
    • Pre-application calls or meetings may be offered to clarify complex business models

Each application receives an NMLS Identification Number, which must be referenced on all physical submissions.

Compliance Requirements for Licensees

Once licensed, businesses must adhere to strict regulatory standards:

Failure to maintain compliance can lead to penalties, suspension, or revocation of license.

Coin Listing and Self-Certification Framework

DFS provides multiple routes for listing virtual currencies:

  1. Direct Approval: Submit a material change application for new coin offerings
  2. Self-Certification: Use an approved internal coin-listing policy to certify new tokens
  3. Greenlist Utilization: Offer pre-approved coins without additional policy approval

Greenlisted Coins (as of latest update)

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

Entities must notify DFS at least 10 days before launching any Greenlisted coin in New York.

DFS retains full discretion to remove coins from the Greenlist or modify listing policies at any time.

Frequently Asked Questions (FAQs)

Who needs a BitLicense?

Any person or company conducting virtual currency business activity involving New York or its residents must hold a BitLicense—unless exempt by law.

Do I need a license to accept crypto payments?

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

Can software developers operate without a license?

Yes. Developing and distributing blockchain tools does not require a BitLicense—unless the service involves custodial functions or exchange operations.

Is mining regulated?

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

What about stablecoins?

Most stablecoins qualify as virtual currencies under 23 NYCRR Part 200. Issuing or managing them typically requires licensing and compliance with coin-listing rules.

👉 Learn how top platforms ensure compliance while scaling globally.

Recent Licensing Trends and Regulated Entities

As of mid-2025, DFS has issued licenses and charters to major players including:

These entities reflect growing institutional confidence in New York’s regulatory clarity.

Final Tips for Applicants

Regulatory approval takes time—but thorough preparation significantly increases chances of success.

👉 Get insights into building a compliant crypto business infrastructure.