New York has become the first US state to issue a bitcoin license. Circle Internet Financial will now have to follow some of the same consumer protection regulations that affect traditional banks.
The state came up with the idea of a specific BitLicense back in January 2014 but had yet to issue one. In June this year, a national agreement standardized the relevant regulation of cryptocurrency financial institutions.
New York had already regulated a company dealing with bitcoin, but that was under much tighter regulations as the company registered as a financial trust.
Circle is about to launch a mobile payment service that lets customers store, receive and transmit funds in both bitcoin and US dollars. The new system means it is now licensed separately for the two currencies.
According to the New York Department of Financial Services, around 25 other applications for a BitLicense are currently under review.
- maintaining a custom-set level of capital to cover its risks and liabilities;
- depositing a surety bond in US dollars to ensure some degree of protection for bitcoin customers;
- maintaining extensive financial records of all activity for at least seven years; and
- following certain measures designed to combat money laundering, including verifying the identity and physical address of customers.
Not everyone is a fan of the regulation however. The Wall Street Journal reports at least one existing cryptocurrency company, GoCoin, has decided to simply block customers from New York State rather than apply for a license.