Bitcoin License – What is it?
A bitcoin license may be required by some countries before a business can begin providing services related to the cryptocurrency. Globally, countries have been scrambling to deal with how to regulate bitcoin and other new digital currencies.
While some countries like India are deliberating outright banning the currency, others are adopting licensing as one of the methods to bring some semblance of control over this new form of money and payments.
For example, the New York BitLicense is the name given to the license that the state of New York grants to businesses that are involved in virtual currency activities.
Similarly, Japan allows bitcoin and other virtual currency businesses to operate as long as they are registered with the Financial Services Agency of Japan.
Bitcoin License in the United States
In the US, bitcoin-based businesses are considered money transmitters and must, therefore, get registered as money transmitter companies. Businesses need to register their business with FinCEN in addition to getting state licenses for all states where they will work.
Each state has different rules and regulations for money transmitter licensing and you will need a bitcoin money transmitter license for each state you want to operate in.
This can be done by applying and following the rules laid out by each state regulator. While many states like Illinois, Texas, and California use the NMLS for new license applications, some states still require you to apply through their financial regulator. For instance, in order to get a money transmitter license in the Virgin Islands, you will need to apply through the Division of Banking, Insurance and Financial Regulation.
Canada Regulation Surrounding Bitcoin
While there is no specific bitcoin license in the country, Canada does require bitcoin businesses to register with its financial regulatory body named the Financial Transactions and Reports Analysis Centre of Canada (Fintrac).
From June 1st, 2020, all virtual currency businesses in Canada will be required to register as money services businesses in order to maintain a legal business.
EU Bitcoin Regulation
In the European Union, laws around bitcoin and other virtual currencies are constantly evolving so it is essential to remain updated about these changes if you intend to launch a new business.
Towards the end of 2019, news of new EU crypto regulations caused bitcoin exchanges to change their methods accordingly. In January 2020, the EU Fifth Anti-Money Laundering Directive (5AMLD) was established which requires cryptocurrency platforms and wallet providers to identify their customers for anti-money laundering purposes.
Changing World of Regulation
More regulations and rules are expected to be launched and implemented globally and businesses that deal with virtual currencies like bitcoin will need to be on their toes to catch up and ensure they do not fall on the wrong side of the law.