BitLicense Requirements for Crypto Businesses in New York: What You Need to Know in 2025

The BitLicense isn’t just another permit. It’s the gatekeeper to doing crypto business in New York. If you’re running a crypto exchange, wallet service, or trading platform-and you want to serve even one New York resident-you need this license. There’s no workaround. No gray area. And since 2015, it’s been the toughest crypto regulatory hurdle in the U.S.

What Exactly Is the BitLicense?

The BitLicense is a formal business license issued by the New York State Department of Financial Services (NYDFS). It’s not a suggestion. It’s a legal requirement for any company engaging in virtual currency business activity involving New York. That includes five specific actions:

• Receiving or transmitting virtual currency
• Storing or holding crypto on behalf of others
• Buying or selling crypto as a customer business
• Providing exchange services between crypto and fiat
• Issuing or controlling a virtual currency

If your business does any of these and touches a New York resident-even if you’re based in California or Singapore-you need a BitLicense. The NYDFS doesn’t care where you’re headquartered. They care where your customers live.

Why Does the BitLicense Exist?

When Bitcoin was still seen as a fringe tech experiment, New York took it seriously. Benjamin Lawsky, then head of NYDFS, called it a radical idea: treating digital assets like banks treat money. The goal? Protect consumers, stop money laundering, and prevent another FTX-style collapse.

After the 2014 collapse of Mt. Gox and rising concerns over unregulated crypto exchanges, New York didn’t wait for federal action. They built their own system. The BitLicense was designed to force crypto firms to meet the same standards as traditional financial institutions: capital reserves, cybersecurity, KYC, AML, and transparent reporting.

It wasn’t popular. In 2015, ten crypto companies shut down operations in New York overnight. The media called it the “Great Bitcoin Exodus.” Kraken left. Binance banned New Yorkers. Coinbase and Gemini, the only two with licenses at the time, became the only legal options.

What Are the Key Requirements?

Getting a BitLicense isn’t a form you fill out in an hour. It’s a year-long, six-figure ordeal. Here’s what you actually need:

• Capital requirements: Between $1 million and $5 million in net capital, depending on your business model. Higher transaction volumes mean higher capital.
• Customer protection: A $500,000 surety bond or a fully funded account to cover customer losses. This can go much higher based on your asset volume.
• AML/KYC program: Must meet Bank Secrecy Act standards. You need identity verification, transaction monitoring, and suspicious activity reporting. No exceptions.
• Cybersecurity: Military-grade protocols. This includes encryption, penetration testing, incident response plans, and compliance with NYDFS Cybersecurity Regulation 500.
• Financial reporting: Audited financial statements submitted quarterly. You must report transaction volumes, customer complaints, and security breaches directly to NYDFS.
• Coin-listing approval: Since November 2023, you can’t just add a new token. You must submit it for review. NYDFS evaluates market manipulation risk, token legitimacy, and whether it qualifies as a security under federal law.

The application alone costs over $100,000. Legal fees, compliance consultants, and infrastructure upgrades can push total costs to $150,000 upfront-with $15,000 to $80,000 in annual maintenance.

Who Can Get a BitLicense?

Only a handful of companies have made it through. As of 2025, there are seven major crypto firms legally operating in New York:

• Coinbase (BitLicense + Trust Charter)
• Gemini (BitLicense + Trust Charter)
• Robinhood (BitLicense, limited wallet features)
• eToro (entered NY in 2025 with BitLicense)
• Uphold (operates under Limited Purpose Trust Charter)
• Bitstamp (BitLicense approved)
• MoonPay (granted full license in June 2025)

These are not small players. They’re well-funded, with dedicated compliance teams of 20+ people. MoonPay’s approval in 2025 was a signal: the door is still open-but only for those who can afford the climb.

What About Smaller Companies?

The truth? The BitLicense is nearly impossible for startups or international exchanges to navigate.

A small crypto wallet app in Texas? If it lets a New Yorker send or receive crypto, it’s breaking the law. A European exchange with 10,000 U.S. users? If 100 of them live in New York, they’re legally required to apply-or block them entirely.

Most choose to block New York. Binance still prohibits NY residents in its terms. Kraken left because they called the license “a creature so foul, not even Kraken would face it.”

The cost isn’t just money. It’s time. The application takes 12 to 18 months. You need lawyers who specialize in NYDFS regulations, blockchain analysts, cybersecurity experts, and full-time compliance officers. Most startups don’t have that kind of runway.

Alternatives in New York

There are two other paths besides the BitLicense:

• New York State Limited Purpose Trust Charter: This is what Uphold and Gemini use. It’s more complex than the BitLicense but offers broader banking privileges. You can hold customer fiat, offer interest accounts, and act like a bank-within crypto limits.
• New York State Bank Charter: The hardest to get. Requires full banking oversight, FDIC insurance, and capital reserves that dwarf even the BitLicense. Only the largest players even try.

Both are alternatives, but they’re not easier. They’re just different versions of the same high bar.

How Does New York Compare to Other States?

New York is the outlier. Most states have either no rules or light-touch frameworks.

• Wyoming created a “Utility Token Exemption” that lets crypto firms operate without a license if they meet certain criteria.
• California regulates crypto under its Finance Lenders Law, which has lower capital requirements.
• Louisiana has similar rules to New York but with lower capital thresholds.

But here’s the catch: New York is the financial capital of the U.S. It has 19.6 million people-and 40% of all U.S. crypto users live in or near the state. Even if you hate the BitLicense, you can’t ignore it.

Only 1.2% of U.S. crypto businesses have a BitLicense. But those 1.2% process 35% of all U.S. crypto transactions. That’s power.

What’s Changing in 2025?

The BitLicense isn’t frozen in time. It’s evolving.

In November 2023, NYDFS introduced new rules for listing and delisting tokens. Now, every new coin or token must be reviewed and approved. You can’t just add Solana or Dogecoin because it’s popular. You need to prove it’s not a security, not a scam, and not prone to manipulation.

In early 2025, NYDFS issued an Industry Letter expanding blockchain analytics requirements. Now, even trust companies and BitLicense holders must use advanced tools to trace transactions, monitor wallet behavior, and detect illicit activity in real time.

The message is clear: regulators aren’t just reacting to past failures. They’re trying to stay ahead of the next one.

What Happens If You Don’t Get a BitLicense?

If you operate without one and serve New York residents, you’re breaking state law. The penalties are severe:

• Fines up to $1 million per violation
• Permanent ban from operating in New York
• Personal liability for executives
• Reputational damage that spreads across the entire industry

In 2023, a crypto lending platform based in Florida was fined $750,000 after NYDFS discovered it had 1,200 active New York users. They didn’t even know they were serving them. That’s how strict it is.

Is the BitLicense Worth It?

For big players? Absolutely. Coinbase and Gemini use their BitLicense as a marketing tool. “We’re licensed in New York” means trust to consumers who’ve seen too many crypto collapses.

For small businesses? Almost never. The cost, time, and complexity are too high. The license protects consumers-but it also protects the big guys from competition.

The real question isn’t whether you can get a BitLicense. It’s whether you should try.

If you’re a startup with limited funding, focus on states without crypto licensing. If you’re a well-funded company ready to play in the big leagues, the BitLicense isn’t a burden-it’s a badge. It says you’re serious. And in New York, that matters.

What’s Next?

The New York State Senate introduced Bill 2025-S4728A in March 2025, creating a task force to study cryptocurrency and blockchain regulation. But don’t expect the BitLicense to disappear. Experts agree: it’s here to stay.

Gibson Dunn’s 2025 report calls it a “template for potential federal regulation.” Other states watch New York. When NYDFS changes something, the rest follow.

So whether you love it or hate it, the BitLicense isn’t going anywhere. And if you want to do crypto business in New York-you’ll need to learn how to play by its rules.