NY Bitlicense definitive framework [pt.2]

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NY2

 

The BitLicense is setting new precedents with its definition of “Virtual Currency” and “Virtual Currency Business Activity.”

Virtual Currency

The definition of virtual currency in the BitLicense is as follows:

Virtual Currency means any type of digital unit that is used as a medium of exchange or a form of digitally stored value. Virtual Currency shall be broadly construed to include digital units of exchange that:

i) have a centralized repository or administrator;

ii) are decentralized and have no centralized repository or administrator; or

iii) may be created or obtained by computing or manufacturing effort.  (§.200.2 (p))

The BitLicense explicitly excludes from the definition:

i) “digital units” used solely within gaming platforms and that do not have a market outside of the game, nor can be sold for Fiat Currency or Virtual Currency;

ii) points within customer rewards programs;

iii) prepaid cards. (§.200.2 (p)(1))

Virtual Currency Business Activity

The BitLicense defines Virtual Currency Business Activity (VCBA) as any of the following:

i) receiving Virtual Currency for Transmission or Transmitting Virtual Currency, except where the transaction is undertaken for non-financial purposes and does not involve the transfer of more than a nominal amount of Virtual Currency;

ii) storing, holding, or maintaining custody or control of Virtual Currency on behalf of others;

iii) buying and selling Virtual Currency as a customer business;

iv) performing Exchange Services as a customer business;

v) controlling, administering, or issuing a Virtual Currency

Miners and mining pools are not considered to be VCBA. Storage and custodian services utilizing multi-signature features are also excluded from the BitLicense.