Understanding BitLicense
The BitLicense, which was implemented in August 2015, was the first regulatory framework created specifically for cryptocurrency businesses in the United States.
This license governs a wide range of activities related to cryptocurrencies, including the transmission of digital currencies, the provision of exchange services, and the issuance of digital assets.
Any individual or entity residing in New York that engages in regulated cryptocurrency activities, or any non-resident entity conducting such activities with New York residents, must obtain a BitLicense. However, individuals involved in making or receiving crypto payments are exempt from this requirement.
Since its launch, BitLicense has been a source of controversy and has faced widespread criticism within the crypto community.
Many crypto businesses argue that the regulatory regime imposes burdensome restrictions and obligations on them. Additionally, the application process for a BitLicense is considered expensive, with estimated costs of at least $100,000.
As a result of these regulations, several crypto-related companies have announced their decision to stop trading activities in New York. Since its introduction, only a few companies have successfully obtained BitLicenses.
Despite the mixed reception from the industry, BitLicense represents a significant milestone in the global effort to regulate the crypto sector, which inherently resists state interference.
Recent events, such as the backlash faced by Facebook’s Libra project from central banks, indicate an inevitable trend towards stricter oversight of cryptocurrencies and decentralized technologies.
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