The New York State Department of Financial Services (NYDFS) released the latest version of of its BitLicense proposal today, an event that sets off another 30-day comment period before the much-anticipated regulation can be finalized.

The revised draft finds the state agency following through on a number of proposed changes it has previously announced publicly, while clarifying the intent and structure of the proposal.

Overall, the revised BitLicense displayed a willingness by the NYDFS to both respond to concerns from the digital currency and wider business community while largely leaving gray areas subject to its discretion and oversight.

Perhaps most notably, however, the revised draft included for the first time an estimation of the cost of applying for licensure, an amount priced at $5,000. The NYDFS indicates that the price is meant to offset the cost the NYDFS incurs by processing and reviewing the application, along with any relevant materials.

Licensees, the document notes, may also be required to pay extra fees for “additional applications related to the license".

If certain promised exemptions were granted, meeting the BitLicense requirements became potentially more onerous for digital currency startups in other ways, the draft document shows.

Licenses are now required by Section 200.4 to submit the names of any individuals “who have access to any customer funds, whether denominated in fiat currency or virtual currency”.

Startups will further need to provide identifying information for these individuals. As in earlier iterations of the proposal, key employees must disclose their name and address, as well as provide documentation related to their personal history and submit to fingerprinting.

Digital currency businesses are notably still required to submit a written plan describing any new product or service, as well as any “material changes” to existing offerings, a portion of the proposal that was widely criticized by the industry.

The section, however, includes a new stipulation that companies may first appeal to the NYDFS to determine the extent to which they need to engage the department on business initiatives.

“If a licensee has any questions about the materiality of any proposed change, the licensee may seek clarification from the department prior to making that change,” the document reads.

During periods of changing ownership, the NYDFS has also proposed new powers that would provide it the ability to determine that any “person does not or will not upon the taking of some proposed action control another person” in instances where new parties acquire stock or interest in a digital currency business.

The text further includes exemptions previously announced by NYDFS superintendent Benjamin M Lawsky.

For example, the text includes an exclusion for software developers first revealed in an interview with CoinDesk, and exemptions for those using the Bitcoin protocol for non-financial means, in what amounts to a boon for the burgeoning crypto 2.0 sector of the industry.

A section was also added that detailed how the NYDFS may grant a conditional license for digital currency startups that don’t meet all the requirements put forth in the proposal.

Such licenses will be valid for two years during which time the proposal indicates they may be subject to “heightened review”. The revised version provides the NYDFS superintendent with wide-ranging powers to renew or revoke conditional licenses.

“In determining whether to issue a conditional license, renew or remove the conditional status of a conditional license, or impose or remove any specific conditions on a conditional license, the superintendent may consider any relevant factor or factors,” the proposal states.

Factors named in the report include the applicant’s business, anticipated volume, the risks the entity poses to the market and the business experience of those involved with the company, among others.

The revised proposal includes additional text that strengthens the NYDFS’ oversight of digital currency businesses when it comes to record-keeping.

The framework now indicates that digital currency businesses will need to keep “a general ledger containing all asset, liability, ownership equity, income and expense accounts”, as well as identifying information for “any parties to the transaction” in addition to the names, account numbers and physical addresses of all those involved.

Oversight was reduced in some ways. For instance, Licensees now need only to preserve books, records and media materials for seven years, down from 10 in earlier editions.

Capital requirements were also relaxed in response to criticism from the digital currency ecosystem, which argued that that businesses were restricted from holding bitcoin and other digital currencies for business operations.

Section 200.8, which details the capital requirements, now states that licensees can hold all necessary capital in “the form of cash, virtual currency, or high-quality, highly liquid, investment-grade assets, in such proportions as are acceptable to the superintendent”.

Elsewhere, merchants who use virtual currency for investment purposes are now exempt from licensing requirements.

The latest version of the proposal includes a number of revised definitions that aim to clarify issues raised during the lengthy review process.

The draft includes, for instance, a specific definition for an “exchange service”, defining it broadly as any business that exchanges fiat currency for virtual currency and vice versa, or virtual currencies for other virtual currencies.

Such a definition was previously provided under a section devoted to defining virtual currency business activity more broadly.

The NYDFS also updated its definition of virtual currency, a request that had been submitted by a number of high-profile figures in the ecosystem.

A definition of a gift card and how it differs from digital currency was further added in a change that would appear to be a response to the request of large e-commerce firms like Amazon and Walmart.

The document can be found in full below.

Further Reading: Buy Our Bitlicense Research Report

Paperwork image via Shutterstock

Revised VC Regulation by CoinDesk