What is New York's BitLicense? Crypto licensing in New York explained

New York has its own license for crypto businesses: the BitLicense, issued by the New York State Department of Financial Services (DFS). If you live in New York, it decides which platforms can legally hold, move, buy or sell crypto for you.

This guide explains what the BitLicense covers, who needs one and who doesn’t, how it differs from the other route into New York, the customer protections that come with it, and how to check a platform. For federal and other state registrations, see how to check a crypto exchange is registered.

What the BitLicense is

The BitLicense is set out in 23 NYCRR Part 200, a regulation under New York’s Financial Services Law. According to the DFS, it took effect on 24 June 2015.

It applies to virtual currency business activity involving New York or New Yorkers, whether the business is run by a company or an individual.

The five activities that need a license

The DFS lists five types of virtual currency business activity, from section 200.2(q) of the regulation:

1. Receiving virtual currency for transmission, or transmitting it.
2. Storing, holding or maintaining custody or control of virtual currency on behalf of others.
3. Buying and selling virtual currency as a customer business.
4. Performing exchange services as a customer business.
5. Controlling, administering or issuing a virtual currency.

So a typical exchange or wallet app that holds customers’ crypto and lets them buy and sell is doing several of these at once.

Who doesn’t need one

The DFS lists activities that don’t, in themselves, require a BitLicense:

In other words, ordinary New Yorkers who buy, hold, spend or donate crypto don’t need a license. The rules are aimed at the businesses that hold, move, buy or sell crypto for customers. Note that giving investment advice can be covered by other laws, even if it doesn’t require a BitLicense.

BitLicense or trust charter

The DFS explains that New York has two ways for crypto businesses to be authorized:

• the BitLicense; and
• a limited purpose trust company charter under New York’s Banking Law.

The difference matters for what a firm can do. According to the DFS, a limited purpose trust company can exercise fiduciary powers, while a BitLicensee can’t. A trust company can also engage in money transmission in New York without a separate money transmitter license.

When you check a firm, the DFS list shows which of the two it holds.

Protections for customers

A bond or trust account. The DFS requires each BitLicensee either to obtain a surety bond or to fund an account for the protection of its customers. It says the minimum is generally $500,000, and the amount can be higher depending on the business model.

Keeping customers’ crypto separate. In guidance updated on 30 September 2025, the DFS set out what it expects from firms that hold crypto for customers, to protect them if the firm becomes insolvent. Among other things, the firm should:

• separately account for and segregate customers’ crypto from the firm’s own assets;
• keep records and an audit trail that identify each customer’s crypto and transactions;
• preserve the customer’s equitable and beneficial interest in their crypto;
• not use customers’ crypto for its own purposes, and act on customers’ instructions;
• clearly disclose its terms and conditions to each customer in writing.

The point is to make clear that the crypto belongs to the customers if a firm becomes insolvent. See what happens when a crypto exchange goes bankrupt.

What a license doesn’t mean

A BitLicense shows that a firm is supervised by New York and has met its requirements. It isn’t:

• insurance against losses: crypto isn’t covered by FDIC deposit insurance. See is your crypto insured?;
• an endorsement of any coin or product the firm offers;
• protection against price falls or against scams you’re tricked into.

A state license, not the whole picture

The BitLicense is a New York requirement. Crypto platforms serving US customers also deal with federal rules: exchanges register with FinCEN as money services businesses, and FinCEN says being listed isn’t an endorsement. Other states have their own licenses, which you can look up on NMLS Consumer Access. See how to check a crypto exchange is registered for each of these lookups.

Questions to ask a platform

If you live in New York, a few direct questions help:

1. Do you hold a BitLicense or a trust charter, and under which legal entity?
2. How do you hold my crypto? In particular, is it kept separate from the company’s own assets, as the DFS guidance expects?
3. Where are your terms in writing, including fees and what happens if the company fails?
4. Can I withdraw my crypto to a wallet I control, and at what cost?

A firm that can’t answer clearly isn’t one to trust with your savings.

How to check a firm

1. Find the DFS Virtual Currency Business Licensing page and look at the list of regulated entities, which shows each firm and its type of license or charter.
2. Make sure the exact legal name matches the company you’re dealing with, not just a similar brand.
3. If you have a problem with a regulated firm, the DFS has a complaints process on its website.

Outside New York, other states and federal agencies have their own rules. For how to check those, and for platforms in the UK and Canada, see how to check a crypto exchange is registered. For choosing between platforms, see how to choose a crypto exchange.