BitLicense is the New York State licence issued by the Department of Financial Services (NYDFS) under 23 NYCRR Part 200 to firms carrying on virtual currency business involving New York or its residents. In force since 2015, it was the first crypto-specific licensing regime in the US and is still one of the hardest to obtain. It covers transmission, custody, buying and selling, exchange services and issuing virtual currency, and the test is the customer's New York residence, not the firm's location. NYDFS sets capital for each licensee individually and runs ongoing examinations. Anyone holding 10% or more of voting stock is presumed to control a licensee, so acquisitions need prior NYDFS approval.
Who needs a BitLicense
A licence is required for five activities when they involve New York or a New York resident: receiving virtual currency for transmission or transmitting it; storing, holding or maintaining custody or control of it on behalf of others; buying and selling it as a customer business; performing exchange services as a customer business; and controlling, administering or issuing a virtual currency. Merchants and consumers using crypto only to buy or sell goods, miners, and those accepting donations are exempt.
Because the test is New York residence of the customer, not the firm's location, an exchange based abroad that onboards New York residents falls within scope.
BitLicense requirements
Applicants file through NMLS with a $5,000 application fee and submit detailed information on owners and directors, background checks, a business plan, financial statements, and compliance, AML, cybersecurity and consumer protection programmes. NYDFS sets capital for each licensee individually, considering assets, liabilities, volume and risk. Licensees face ongoing examinations, reporting duties and annual supervisory assessments. Firms that also move fiat money in New York typically need a state money transmitter licence as well.
BitLicense vs limited purpose trust charter
The alternative is a limited purpose trust company charter under the New York Banking Law. It grants the same virtual currency authority, also lets the firm act as a fiduciary, and covers money transmission in New York without a separate money transmitter licence. Large custodians and stablecoin issuers often choose the charter despite its heavier capital and governance requirements.
BitLicense change of control
Ownership changes need prior NYDFS approval. Anyone holding 10% or more of a licensee's voting stock, directly or through a parent, is presumed to control it. The acquirer files an application, and NYDFS must approve or deny within 120 days of a complete filing, though the superintendent may extend that period for good cause.
An illustrative case: a European exchange agrees to buy a 25% stake in a New York-licensed custodian. Even if the deal is signed in March, the buyer cannot close until NYDFS approves, and the buyer's owners, directors and source of funds are reviewed as if it were a new applicant.
Why buyers acquire BitLicensed firms
Given how few firms hold one, an existing BitLicense is a scarce asset, and acquiring a licensee is a common route into the New York market. Diligence should cover the licence's conditions, recent NYDFS examination findings, any consent orders, and whether the target's custody arrangements follow NYDFS guidance on protecting customer assets if the custodian becomes insolvent, updated in September 2025.