Yesterday, the New York Department of Financial Services (“NYDFS”) issued a proposed rule for public comment setting forth a novel and comprehensive “BitLicense” regulatory scheme for entities engaged in “Virtual Currency Business Activities.” The BitLicense proposal would require any entity engaged in Virtual Currency Business Activities, as defined below, to obtain a license and otherwise comply with any new requirements, if the activities involve the state of New York or a New York resident. The proposal will be published in New York State’s Register on July 23, 2014, and comments on the proposal are due September 6, 2014. The NYDFS also published a copy of the proposal on various social media sites, including Reddit and Twitter.

The NYDFS says the BitLicense proposal is the product of a nearly year-long initiative by the NYDFS to assess and determine the “appropriate regulatory response” to the emergence and popularity of virtual currencies. The result of this initiative is a proposal that would impose extensive regulation on entities involved in virtual currency systems.