S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8813
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 9, 2025
                                ___________
 
 Introduced  by M. of A. BORES -- read once and referred to the Committee
   on Banks
 
 AN ACT to amend the financial services law, in relation to regulation of
   business involving virtual currencies
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The financial services law is amended by adding a new arti-
 cle 10 to read as follows:
 
                                ARTICLE 10
                            VIRTUAL CURRENCIES
 
 SECTION 1001. DEFINITIONS.
         1002. LICENSE.
         1003. APPLICATION.
         1004. APPLICATION FEES.
         1005. ACTION BY SUPERINTENDENT.
         1006. COMPLIANCE.
         1007. CAPITAL REQUIREMENTS.
         1008. CUSTODY AND PROTECTION OF CUSTOMER ASSETS.
         1009. MATERIAL CHANGE TO BUSINESS.
         1010. CHANGE OF CONTROL; MERGERS AND ACQUISITIONS.
         1011. BOOKS AND RECORDS.
         1012. EXAMINATIONS.
         1013. REPORTS AND FINANCIAL DISCLOSURES.
         1014. ANTI-MONEY LAUNDERING PROGRAM.
         1015. CYBER SECURITY PROGRAM.
         1016. BUSINESS CONTINUITY AND DISASTER RECOVERY.
         1017. ADVERTISING AND MARKETING.
         1018. CONSUMER PROTECTION.
         1019. COMPLAINTS.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09815-02-5
              

 A. 8813                             2
 
         1020. TRANSITIONAL PERIOD.
         1021. SEVERABILITY.
   §  1001.  DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE, THE FOLLOWING
 TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   (A) "AFFILIATE" MEANS ANY PERSON THAT DIRECTLY OR INDIRECTLY CONTROLS,
 IS CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, ANOTHER PERSON.
   (B) "CYBER SECURITY EVENT" MEANS ANY ACT  OR  ATTEMPT,  SUCCESSFUL  OR
 UNSUCCESSFUL,  TO  GAIN  UNAUTHORIZED  ACCESS  TO,  DISRUPT, OR MISUSE A
 LICENSEE'S ELECTRONIC SYSTEMS OR INFORMATION STORED ON SUCH SYSTEMS.
   (C) "EXCHANGE SERVICE"  MEANS  THE  CONVERSION  OR  EXCHANGE  OF  FIAT
 CURRENCY  OR  OTHER  VALUE  INTO  VIRTUAL  CURRENCY,  THE  CONVERSION OR
 EXCHANGE OF VIRTUAL CURRENCY INTO FIAT CURRENCY OR OTHER VALUE,  OR  THE
 CONVERSION OR EXCHANGE OF ONE FORM OF VIRTUAL CURRENCY INTO ANOTHER FORM
 OF VIRTUAL CURRENCY.
   (D)  "FIAT  CURRENCY"  MEANS GOVERNMENT-ISSUED CURRENCY THAT IS DESIG-
 NATED AS LEGAL TENDER IN ITS  COUNTRY  OF  ISSUANCE  THROUGH  GOVERNMENT
 DECREE, REGULATION, OR LAW.
   (E)  "LICENSEE"  MEANS  ANY PERSON DULY LICENSED BY THE SUPERINTENDENT
 PURSUANT TO THIS ARTICLE.
   (F) "NEW YORK STATE  RESIDENT"  MEANS  ANY  PERSON  THAT  RESIDES,  IS
 LOCATED,  HAS A PLACE OF BUSINESS, OR IS CONDUCTING BUSINESS IN NEW YORK
 STATE.
   (G) "PERSON" MEANS AN INDIVIDUAL,  PARTNERSHIP,  CORPORATION,  ASSOCI-
 ATION,  JOINT  STOCK ASSOCIATION, TRUST, OR OTHER ENTITY, HOWEVER ORGAN-
 IZED.
   (H) "PREPAID CARD" MEANS AN ELECTRONIC PAYMENT DEVICE THAT:
   (1) IS USABLE AT A SINGLE MERCHANT OR AN AFFILIATED GROUP OF MERCHANTS
 THAT SHARE THE SAME NAME, MARK, OR LOGO, OR IS USABLE AT MULTIPLE, UNAF-
 FILIATED MERCHANTS OR SERVICE PROVIDERS;
   (2) IS ISSUED IN AND FOR A SPECIFIED AMOUNT OF FIAT CURRENCY;
   (3) CAN BE RELOADED IN AND FOR ONLY FIAT CURRENCY, IF AT ALL;
   (4) IS ISSUED AND/OR RELOADED  ON  A  PREPAID  BASIS  FOR  THE  FUTURE
 PURCHASE OR DELIVERY OF GOODS OR SERVICES;
   (5) IS HONORED UPON PRESENTATION; AND
   (6) CAN BE REDEEMED IN AND FOR ONLY FIAT CURRENCY, IF AT ALL.
   (I)  "PRINCIPAL  OFFICER"  MEANS  AN  EXECUTIVE  OFFICER OF AN ENTITY,
 INCLUDING, BUT NOT LIMITED TO, THE CHIEF EXECUTIVE,  FINANCIAL,  OPERAT-
 ING, AND COMPLIANCE OFFICERS, PRESIDENT, GENERAL COUNSEL, MANAGING PART-
 NER, GENERAL PARTNER, CONTROLLING PARTNER, AND TRUSTEE, AS APPLICABLE.
   (J)  "PRINCIPAL  STOCKHOLDER"  MEANS ANY PERSON THAT DIRECTLY OR INDI-
 RECTLY OWNS, CONTROLS, OR HOLDS WITH POWER TO VOTE TEN PERCENT  OR  MORE
 OF ANY CLASS OF OUTSTANDING CAPITAL STOCK OR OTHER EQUITY INTEREST OF AN
 ENTITY  OR  POSSESSES  THE POWER TO DIRECT OR CAUSE THE DIRECTION OF THE
 MANAGEMENT OR POLICIES OF THE ENTITY.
   (K) "PRINCIPAL BENEFICIARY" MEANS ANY PERSON ENTITLED TO  TEN  PERCENT
 OR MORE OF THE BENEFITS OF A TRUST.
   (L)  "QUALIFIED CUSTODIAN" MEANS A BANK, TRUST COMPANY, NATIONAL BANK,
 SAVINGS BANK, SAVINGS AND LOAN ASSOCIATION, FEDERAL SAVINGS ASSOCIATION,
 CREDIT UNION, OR FEDERAL CREDIT UNION, AS  SUCH  TERMS  ARE  DEFINED  OR
 OTHERWISE  USED BY THE BANKING LAW, IN THE STATE OF NEW YORK, SUBJECT TO
 THE PRIOR APPROVAL OF THE SUPERINTENDENT.
   (M) "TRANSMISSION" MEANS THE TRANSFER, BY OR THROUGH A THIRD PARTY, OF
 VIRTUAL CURRENCY FROM A PERSON TO A PERSON, INCLUDING THE TRANSFER  FROM
 THE  ACCOUNT OR STORAGE REPOSITORY OF A PERSON TO THE ACCOUNT OR STORAGE
 REPOSITORY OF A PERSON.
 A. 8813                             3
 
   (N) "VIRTUAL CURRENCY" (1) MEANS ANY TYPE OF DIGITAL UNIT THAT IS USED
 AS A MEDIUM OF EXCHANGE OR A FORM OF DIGITALLY STORED VALUE,  AND  SHALL
 BE BROADLY CONSTRUED TO INCLUDE DIGITAL UNITS OF EXCHANGE THAT: (A) HAVE
 A  CENTRALIZED  REPOSITORY  OR  ADMINISTRATOR; (B) ARE DECENTRALIZED AND
 HAVE  NO  CENTRALIZED REPOSITORY OR ADMINISTRATOR; OR (C) MAY BE CREATED
 OR OBTAINED BY COMPUTING OR MANUFACTURING EFFORT; AND
   (2) SHALL NOT BE CONSTRUED TO INCLUDE ANY OF THE FOLLOWING:
   (A) DIGITAL UNITS THAT:
   (I) ARE USED SOLELY WITHIN ONLINE GAMING PLATFORMS;
   (II) HAVE NO MARKET OR APPLICATION OUTSIDE OF ONLINE GAMING PLATFORMS;
   (III) CANNOT BE CONVERTED INTO, OR  REDEEMED  FOR,  FIAT  CURRENCY  OR
 VIRTUAL CURRENCY; AND
   (IV)  MAY  OR  MAY  NOT  BE REDEEMABLE FOR REAL-WORLD GOODS, SERVICES,
 DISCOUNTS, OR PURCHASES;
   (B) DIGITAL UNITS THAT CAN BE REDEEMED FOR GOODS, SERVICES, DISCOUNTS,
 OR PURCHASES AS PART OF A CUSTOMER AFFINITY OR REWARDS PROGRAM WITH  THE
 ISSUER  AND/OR OTHER DESIGNATED MERCHANTS OR CAN BE REDEEMED FOR DIGITAL
 UNITS IN ANOTHER CUSTOMER AFFINITY OR REWARDS  PROGRAM,  BUT  CANNOT  BE
 CONVERTED INTO, OR REDEEMED FOR, FIAT CURRENCY OR VIRTUAL CURRENCY; OR
   (C) DIGITAL UNITS USED AS PART OF PREPAID CARDS.
   (O)  "VIRTUAL CURRENCY BUSINESS ACTIVITY" MEANS THE CONDUCT OF ANY ONE
 OF THE FOLLOWING TYPES OF ACTIVITIES INVOLVING NEW YORK STATE OR  A  NEW
 YORK STATE RESIDENT, PROVIDED, HOWEVER, THAT THE DEVELOPMENT AND DISSEM-
 INATION  OF  SOFTWARE  IN  AND  OF  ITSELF  SHALL NOT CONSTITUTE VIRTUAL
 CURRENCY BUSINESS ACTIVITY:
   (1) RECEIVING VIRTUAL CURRENCY FOR TRANSMISSION OR TRANSMITTING VIRTU-
 AL CURRENCY, EXCEPT WHERE THE TRANSACTION IS UNDERTAKEN  FOR  NON-FINAN-
 CIAL  PURPOSES  AND DOES NOT INVOLVE THE TRANSFER OF MORE THAN A NOMINAL
 AMOUNT OF VIRTUAL CURRENCY;
   (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; OR
   (5) CONTROLLING, ADMINISTERING, OR ISSUING A VIRTUAL CURRENCY.
   §  1002. LICENSE. (A) NO PERSON SHALL, WITHOUT A LICENSE OBTAINED FROM
 THE SUPERINTENDENT AS PROVIDED IN THIS ARTICLE, ENGAGE  IN  ANY  VIRTUAL
 CURRENCY  BUSINESS  ACTIVITY.  LICENSEES  ARE NOT AUTHORIZED TO EXERCISE
 FIDUCIARY POWERS, AS DEFINED BY SECTION ONE HUNDRED OF THE BANKING LAW.
   (B) EACH LICENSEE IS PROHIBITED FROM CONDUCTING ANY  VIRTUAL  CURRENCY
 BUSINESS ACTIVITY THROUGH AN AGENT OR AGENCY ARRANGEMENT WHEN SUCH AGENT
 IS NOT A LICENSEE.
   (C)  THE  FOLLOWING PERSONS ARE EXEMPT FROM THE LICENSING REQUIREMENTS
 OTHERWISE APPLICABLE UNDER THIS ARTICLE:
   (1) PERSONS THAT ARE CHARTERED UNDER THE BANKING LAW AND ARE  APPROVED
 BY  THE  SUPERINTENDENT TO ENGAGE IN VIRTUAL CURRENCY BUSINESS ACTIVITY;
 AND
   (2) MERCHANTS AND CONSUMERS THAT UTILIZE VIRTUAL CURRENCY  SOLELY  FOR
 THE PURCHASE OR SALE OF GOODS OR SERVICES OR FOR INVESTMENT PURPOSES.
   § 1003. APPLICATION. (A) APPLICATION FOR A LICENSE REQUIRED UNDER THIS
 ARTICLE SHALL BE IN WRITING, UNDER OATH, AND IN A FORM PRESCRIBED BY THE
 SUPERINTENDENT, AND SHALL CONTAIN THE FOLLOWING:
   (1)  THE  EXACT NAME OF THE APPLICANT, INCLUDING ANY DOING BUSINESS AS
 NAME, THE FORM OF ORGANIZATION, THE DATE OF ORGANIZATION, AND THE JURIS-
 DICTION WHERE ORGANIZED OR INCORPORATED;
 A. 8813                             4
 
   (2) A LIST OF ALL OF THE APPLICANT'S AFFILIATES  AND  AN  ORGANIZATION
 CHART  ILLUSTRATING THE RELATIONSHIP AMONG THE APPLICANT AND SUCH AFFIL-
 IATES;
   (3)  A  LIST OF, AND DETAILED BIOGRAPHICAL INFORMATION FOR, EACH INDI-
 VIDUAL APPLICANT AND EACH DIRECTOR, PRINCIPAL OFFICER, PRINCIPAL  STOCK-
 HOLDER,  AND  PRINCIPAL  BENEFICIARY  OF  THE  APPLICANT, AS APPLICABLE,
 INCLUDING SUCH INDIVIDUAL'S NAME, PHYSICAL AND  MAILING  ADDRESSES,  AND
 INFORMATION  AND  DOCUMENTATION  REGARDING  SUCH  INDIVIDUAL'S  PERSONAL
 HISTORY, EXPERIENCE, AND QUALIFICATION, WHICH SHALL BE ACCOMPANIED BY  A
 FORM  OF  AUTHORITY, EXECUTED BY SUCH INDIVIDUAL, TO RELEASE INFORMATION
 TO THE DEPARTMENT;
   (4) A BACKGROUND REPORT PREPARED BY AN INDEPENDENT INVESTIGATORY AGEN-
 CY ACCEPTABLE TO THE SUPERINTENDENT FOR EACH INDIVIDUAL  APPLICANT,  AND
 EACH PRINCIPAL OFFICER, PRINCIPAL STOCKHOLDER, AND PRINCIPAL BENEFICIARY
 OF THE APPLICANT, AS APPLICABLE;
   (5) FOR EACH INDIVIDUAL APPLICANT, FOR EACH PRINCIPAL OFFICER, PRINCI-
 PAL STOCKHOLDER, AND PRINCIPAL BENEFICIARY OF THE APPLICANT, AS APPLICA-
 BLE,  AND  FOR  ALL INDIVIDUALS TO BE EMPLOYED BY THE APPLICANT WHO HAVE
 ACCESS TO ANY CUSTOMER FUNDS, WHETHER DENOMINATED IN  FIAT  CURRENCY  OR
 VIRTUAL CURRENCY:
   (A)  A  SET  OF  COMPLETED  FINGERPRINTS,  OR A RECEIPT INDICATING THE
 VENDOR, WHERE SUCH VENDOR IS DEEMED ACCEPTABLE BY THE SUPERINTENDENT, AT
 WHICH, AND THE DATE WHEN, SUCH FINGERPRINTS WERE TAKEN,  FOR  SUBMISSION
 TO  THE  DIVISION OF CRIMINAL JUSTICE SERVICES AND THE FEDERAL BUREAU OF
 INVESTIGATION;
   (B) IF APPLICABLE, SUCH PROCESSING FEES AS PRESCRIBED  BY  THE  SUPER-
 INTENDENT; AND
   (C)  TWO  PORTRAIT-STYLE  PHOTOGRAPHS  OF THE INDIVIDUAL MEASURING NOT
 MORE THAN TWO INCHES BY TWO INCHES;
   (6) AN ORGANIZATION CHART OF THE APPLICANT AND ITS  MANAGEMENT  STRUC-
 TURE,  INCLUDING ITS PRINCIPAL OFFICERS OR SENIOR MANAGEMENT, INDICATING
 LINES OF AUTHORITY AND THE ALLOCATION  OF  DUTIES  AMONG  ITS  PRINCIPAL
 OFFICERS OR SENIOR MANAGEMENT;
   (7) A CURRENT FINANCIAL STATEMENT FOR THE APPLICANT AND EACH PRINCIPAL
 OFFICER,  PRINCIPAL STOCKHOLDER, AND PRINCIPAL BENEFICIARY OF THE APPLI-
 CANT, AS APPLICABLE, AND A PROJECTED BALANCE SHEET AND INCOME  STATEMENT
 FOR THE FOLLOWING YEAR OF THE APPLICANT'S OPERATION;
   (8) A DESCRIPTION OF THE PROPOSED, CURRENT, AND HISTORICAL BUSINESS OF
 THE  APPLICANT,  INCLUDING  DETAIL ON THE PRODUCTS AND SERVICES PROVIDED
 AND TO BE PROVIDED, ALL ASSOCIATED WEBSITE ADDRESSES, THE  JURISDICTIONS
 IN  WHICH  THE  APPLICANT IS ENGAGED IN BUSINESS, THE PRINCIPAL PLACE OF
 BUSINESS, THE PRIMARY MARKET OF OPERATION, THE PROJECTED CUSTOMER  BASE,
 ANY  SPECIFIC  MARKETING TARGETS, AND THE PHYSICAL ADDRESS OF ANY OPERA-
 TION IN NEW YORK STATE;
   (9) DETAILS OF ALL BANKING ARRANGEMENTS;
   (10) ALL WRITTEN POLICIES AND PROCEDURES REQUIRED BY, OR  RELATED  TO,
 THE REQUIREMENTS OF THIS ARTICLE;
   (11) AN AFFIDAVIT DESCRIBING ANY PENDING OR THREATENED ADMINISTRATIVE,
 CIVIL,  OR CRIMINAL ACTION, LITIGATION, OR PROCEEDING BEFORE ANY GOVERN-
 MENTAL AGENCY, COURT, OR ARBITRATION TRIBUNAL AGAINST THE  APPLICANT  OR
 ANY  OF  ITS  DIRECTORS, PRINCIPAL OFFICERS, PRINCIPAL STOCKHOLDERS, AND
 PRINCIPAL BENEFICIARIES, AS  APPLICABLE,  INCLUDING  THE  NAMES  OF  THE
 PARTIES,  THE  NATURE  OF  THE PROCEEDING, AND THE CURRENT STATUS OF THE
 PROCEEDING;
 A. 8813                             5
 
   (12) VERIFICATION FROM THE DEPARTMENT OF TAXATION AND FINANCE THAT THE
 APPLICANT IS COMPLIANT WITH ALL NEW YORK STATE TAX OBLIGATIONS IN A FORM
 ACCEPTABLE TO THE SUPERINTENDENT;
   (13)  IF  APPLICABLE,  A COPY OF ANY INSURANCE POLICIES MAINTAINED FOR
 THE BENEFIT OF THE APPLICANT, ITS DIRECTORS OR OFFICERS, OR ITS  CUSTOM-
 ERS;
   (14)  AN EXPLANATION OF THE METHODOLOGY USED TO CALCULATE THE VALUE OF
 VIRTUAL CURRENCY IN FIAT CURRENCY; AND
   (15) SUCH OTHER  ADDITIONAL  INFORMATION  AS  THE  SUPERINTENDENT  MAY
 REQUIRE.
   (B)  AS  PART  OF AN APPLICATION UNDER SUBSECTION (A) OF THIS SECTION,
 THE APPLICANT SHALL DEMONSTRATE THAT IT WILL BE COMPLIANT  WITH  ALL  OF
 THE REQUIREMENTS OF THIS ARTICLE UPON LICENSING.
   (C)  (1)  NOTWITHSTANDING  SUBSECTION  (B) OF THIS SECTION, THE SUPER-
 INTENDENT MAY IN THE SUPERINTENDENT'S  SOLE  DISCRETION  AND  CONSISTENT
 WITH THE PURPOSES AND INTENT OF THIS ARTICLE AND ANY OTHER PROVISIONS OF
 THIS CHAPTER, APPROVE AN APPLICATION BY GRANTING A CONDITIONAL LICENSE.
   (2)  A CONDITIONAL LICENSE MAY BE ISSUED TO AN APPLICANT THAT DOES NOT
 SATISFY ALL REGULATORY REQUIREMENTS UPON LICENSING.
   (3) A LICENSEE THAT HOLDS A CONDITIONAL  LICENSE  MAY  BE  SUBJECT  TO
 HEIGHTENED REVIEW, WHETHER IN REGARD TO THE SCOPE AND FREQUENCY OF EXAM-
 INATION OR OTHERWISE.
   (4)  UNLESS  THE  SUPERINTENDENT  REMOVES THE CONDITIONAL STATUS OF OR
 RENEWS A CONDITIONAL LICENSE, SUCH LICENSE SHALL EXPIRE TWO YEARS  AFTER
 ITS DATE OF ISSUANCE.
   (A) THE SUPERINTENDENT MAY IN THE SUPERINTENDENT'S SOLE DISCRETION AND
 CONSISTENT  WITH  THE  PURPOSES AND INTENT OF THIS ARTICLE AND ANY OTHER
 PROVISIONS OF THIS CHAPTER:
   (I) RENEW A CONDITIONAL LICENSE FOR AN ADDITIONAL LENGTH OF TIME; OR
   (II) REMOVE THE CONDITIONAL STATUS FROM A CONDITIONAL LICENSE.
   (5) A CONDITIONAL LICENSE MAY BE  SUSPENDED  OR  REVOKED  PURSUANT  TO
 SECTION ONE THOUSAND FIVE OF THIS ARTICLE.
   (6)  A  CONDITIONAL  LICENSE  MAY  IMPOSE  ANY REASONABLE CONDITION OR
 CONDITIONS, AS DETERMINED BY THE SUPERINTENDENT IN THE  SUPERINTENDENT'S
 SOLE DISCRETION.
   (7)  THE  SUPERINTENDENT MAY REMOVE ANY CONDITION OR CONDITIONS FROM A
 CONDITIONAL LICENSE THAT HAS BEEN ISSUED.
   (8) 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 SUPERINTEN-
 DENT MAY CONSIDER ANY RELEVANT FACTOR OR FACTORS. RELEVANT  FACTORS  MAY
 INCLUDE BUT ARE NOT LIMITED TO:
   (A) THE NATURE AND SCOPE OF THE APPLICANT'S OR LICENSEE'S BUSINESS;
   (B)  THE ANTICIPATED VOLUME OF BUSINESS TO BE TRANSACTED BY THE APPLI-
 CANT OR LICENSEE;
   (C) THE NATURE  AND  SCOPE  OF  THE  RISKS  THAT  THE  APPLICANT'S  OR
 LICENSEE'S  BUSINESS  PRESENTS  TO  CONSUMERS, VIRTUAL CURRENCY MARKETS,
 FINANCIAL MARKETS, AND THE GENERAL PUBLIC;
   (D) ANY MEASURES WHICH THE APPLICANT OR LICENSEE HAS TAKEN TO LIMIT OR
 MITIGATE THE RISKS ITS BUSINESS PRESENTS;
   (E) WHETHER THE APPLICANT OR LICENSEE IS REGISTERED WITH THE FINANCIAL
 CRIMES ENFORCEMENT NETWORK WITHIN THE UNITED STATES  DEPARTMENT  OF  THE
 TREASURY;
   (F)  WHETHER  THE  APPLICANT  OR  LICENSEE IS LICENSED, REGISTERED, OR
 OTHERWISE AUTHORIZED BY ANY GOVERNMENTAL OR SELF-REGULATORY AUTHORITY TO
 ENGAGE IN FINANCIAL SERVICES OR OTHER BUSINESS ACTIVITIES;
 A. 8813                             6
 
   (G) THE APPLICANT'S OR LICENSEE'S FINANCIAL SERVICES OR OTHER BUSINESS
 EXPERIENCE; AND
   (H) THE LICENSEE'S HISTORY AS A HOLDER OF A CONDITIONAL LICENSE ISSUED
 BY THE SUPERINTENDENT.
   (D)  THE  SUPERINTENDENT  MAY  AUTHORIZE  THAT  ANY  APPLICATION FOR A
 LICENSE UNDER THIS ARTICLE, OR ANY OTHER  SUBMISSION  REQUIRED  BY  THIS
 ARTICLE, BE MADE OR EXECUTED BY ELECTRONIC MEANS.
   §  1004.  APPLICATION  FEES.  AS  PART OF AN APPLICATION FOR LICENSING
 UNDER THIS ARTICLE, EACH APPLICANT SHALL SUBMIT AN  INITIAL  APPLICATION
 FEE,  IN THE AMOUNT OF FIVE THOUSAND DOLLARS, TO COVER THE COST OF PROC-
 ESSING THE APPLICATION, REVIEWING APPLICATION MATERIALS, AND INVESTIGAT-
 ING THE FINANCIAL CONDITION AND RESPONSIBILITY, FINANCIAL  AND  BUSINESS
 EXPERIENCE,  AND  CHARACTER AND GENERAL FITNESS OF THE APPLICANT. IF THE
 APPLICATION IS DENIED OR WITHDRAWN, SUCH FEE SHALL NOT BE REFUNDED. EACH
 LICENSEE MAY BE REQUIRED TO PAY FEES TO THE DEPARTMENT TO PROCESS  ADDI-
 TIONAL APPLICATIONS RELATED TO THE LICENSE.
   §  1005.  ACTION BY SUPERINTENDENT. (A) UPON THE FILING OF AN APPLICA-
 TION FOR LICENSING UNDER THIS ARTICLE, PAYMENT OF THE REQUIRED FEE,  AND
 DEMONSTRATION  BY  THE  APPLICANT  OF  ITS  ABILITY  TO  COMPLY WITH THE
 PROVISIONS OF THIS ARTICLE  UPON  LICENSING,  THE  SUPERINTENDENT  SHALL
 INVESTIGATE  THE  FINANCIAL  CONDITION AND RESPONSIBILITY, FINANCIAL AND
 BUSINESS EXPERIENCE, AND CHARACTER AND GENERAL FITNESS  OF  SUCH  APPLI-
 CANT.    IF  THE  SUPERINTENDENT FINDS SUCH QUALITIES WARRANT THE BELIEF
 THAT SUCH APPLICANT'S  BUSINESS  WILL  BE  CONDUCTED  HONESTLY,  FAIRLY,
 EQUITABLY,  CAREFULLY, AND EFFICIENTLY WITHIN THE PURPOSES AND INTENT OF
 THIS ARTICLE, AND IN A MANNER COMMANDING THE CONFIDENCE AND TRUST OF THE
 COMMUNITY, THE SUPERINTENDENT SHALL ADVISE SUCH APPLICANT IN WRITING  OF
 THE  SUPERINTENDENT'S  APPROVAL  OF SUCH APPLICATION, AND SHALL ISSUE TO
 SUCH APPLICANT A LICENSE TO CONDUCT VIRTUAL CURRENCY BUSINESS  ACTIVITY,
 SUBJECT  TO  THE PROVISIONS OF THIS ARTICLE AND SUCH OTHER CONDITIONS AS
 THE SUPERINTENDENT SHALL DEEM APPROPRIATE;  OR  THE  SUPERINTENDENT  MAY
 DENY THE APPLICATION.
   (B)  THE  SUPERINTENDENT SHALL APPROVE OR DENY EVERY APPLICATION FOR A
 LICENSE UNDER THIS ARTICLE WITHIN NINETY DAYS  FROM  THE  FILING  OF  AN
 APPLICATION  DEEMED BY THE SUPERINTENDENT TO BE COMPLETE. SUCH PERIOD OF
 NINETY DAYS MAY BE EXTENDED AT THE DISCRETION OF THE SUPERINTENDENT  FOR
 SUCH  ADDITIONAL  REASONABLE PERIOD OF TIME AS MAY BE REQUIRED TO ENABLE
 COMPLIANCE WITH THIS ARTICLE. A LICENSE ISSUED PURSUANT TO THIS  ARTICLE
 SHALL  REMAIN  IN  FULL  FORCE AND EFFECT UNTIL IT IS SURRENDERED BY THE
 LICENSEE, IS REVOKED OR SUSPENDED, OR EXPIRES AS PROVIDED IN THIS  ARTI-
 CLE.
   (C)  THE  SUPERINTENDENT  MAY SUSPEND OR REVOKE A LICENSE ISSUED UNDER
 THIS ARTICLE ON ANY GROUND ON WHICH THE SUPERINTENDENT MIGHT  REFUSE  TO
 ISSUE  AN  ORIGINAL  LICENSE,  FOR  A VIOLATION OF ANY PROVISION OF THIS
 ARTICLE, FOR GOOD CAUSE SHOWN, OR FOR FAILURE OF THE LICENSEE TO  PAY  A
 JUDGMENT,  RECOVERED  IN  ANY  COURT, WITHIN OR WITHOUT THIS STATE, BY A
 CLAIMANT OR CREDITOR IN AN ACTION ARISING OUT OF, OR  RELATING  TO,  THE
 LICENSEE'S  VIRTUAL CURRENCY BUSINESS ACTIVITY, WITHIN THIRTY DAYS AFTER
 THE JUDGMENT BECOMES FINAL OR WITHIN THIRTY  DAYS  AFTER  EXPIRATION  OR
 TERMINATION  OF  A STAY OF EXECUTION THEREON; PROVIDED, HOWEVER, THAT IF
 EXECUTION ON THE JUDGMENT IS STAYED, BY COURT ORDER OR OPERATION OF  LAW
 OR  OTHERWISE,  THEN  PROCEEDINGS  TO SUSPEND OR REVOKE THE LICENSE, FOR
 FAILURE OF THE LICENSEE TO PAY SUCH JUDGMENT, SHALL NOT BE COMMENCED  BY
 THE  SUPERINTENDENT  DURING  THE  TIME OF SUCH STAY, AND FOR THIRTY DAYS
 THEREAFTER. FOR THE PURPOSES OF  THIS  SUBSECTION,  "GOOD  CAUSE"  SHALL
 EXIST  WHEN A LICENSEE HAS DEFAULTED OR IS LIKELY TO DEFAULT IN PERFORM-
 A. 8813                             7
 
 ING ITS OBLIGATIONS OR FINANCIAL ENGAGEMENTS  OR  ENGAGES  IN  UNLAWFUL,
 DISHONEST,  WRONGFUL, OR INEQUITABLE CONDUCT OR PRACTICES THAT MAY CAUSE
 HARM TO THE PUBLIC.
   (D) NO LICENSE ISSUED UNDER THIS ARTICLE SHALL BE REVOKED OR SUSPENDED
 EXCEPT AFTER A HEARING THEREON. THE SUPERINTENDENT SHALL GIVE A LICENSEE
 NO  LESS  THAN  TEN  DAYS'  WRITTEN NOTICE OF THE TIME AND PLACE OF SUCH
 HEARING BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE PRINCIPAL PLACE
 OF BUSINESS OF SUCH LICENSEE. ANY ORDER OF THE SUPERINTENDENT SUSPENDING
 OR REVOKING SUCH LICENSE SHALL STATE THE GROUNDS UPON WHICH IT IS  BASED
 AND BE SENT BY REGISTERED OR CERTIFIED MAIL TO THE LICENSEE AT ITS PRIN-
 CIPAL PLACE OF BUSINESS AS SHOWN IN THE RECORDS OF THE DEPARTMENT.
   (E) THE SUPERINTENDENT MAY, WHEN DEEMED BY THE SUPERINTENDENT TO BE IN
 THE  PUBLIC INTEREST, SEEK A PRELIMINARY INJUNCTION TO RESTRAIN A LICEN-
 SEE FROM CONTINUING TO PERFORM ACTS THAT VIOLATE ANY PROVISION  OF  THIS
 ARTICLE OR OF THIS CHAPTER, THE BANKING LAW, OR THE INSURANCE LAW.
   (F)  NOTHING  IN THIS ARTICLE SHALL BE CONSTRUED AS LIMITING ANY POWER
 GRANTED TO THE SUPERINTENDENT UNDER ANY OTHER PROVISION OF THIS CHAPTER,
 THE BANKING LAW, OR THE INSURANCE LAW, INCLUDING ANY POWER  TO  INVESTI-
 GATE POSSIBLE VIOLATIONS OF LAW, RULE, OR REGULATION OR TO IMPOSE PENAL-
 TIES  OR  TAKE ANY OTHER ACTION AGAINST ANY PERSON FOR VIOLATION OF SUCH
 LAWS, RULES, OR REGULATIONS.
   § 1006. COMPLIANCE. (A) EACH LICENSEE IS REQUIRED TO COMPLY  WITH  ALL
 APPLICABLE FEDERAL AND STATE LAWS, RULES, AND REGULATIONS.
   (B)  EACH  LICENSEE SHALL DESIGNATE A QUALIFIED INDIVIDUAL OR INDIVID-
 UALS RESPONSIBLE FOR COORDINATING AND MONITORING  COMPLIANCE  WITH  THIS
 ARTICLE  AND  ALL  OTHER  APPLICABLE  FEDERAL AND STATE LAWS, RULES, AND
 REGULATIONS.
   (C) EACH LICENSEE SHALL MAINTAIN AND ENFORCE WRITTEN COMPLIANCE  POLI-
 CIES, INCLUDING POLICIES WITH RESPECT TO ANTI-FRAUD, ANTI-MONEY LAUNDER-
 ING,  CYBER  SECURITY,  PRIVACY  AND INFORMATION SECURITY, AND ANY OTHER
 POLICY REQUIRED UNDER THIS ARTICLE, WHICH SHALL BE REVIEWED AND APPROVED
 BY SUCH LICENSEE'S BOARD OF DIRECTORS OR AN EQUIVALENT GOVERNING BODY.
   § 1007. CAPITAL REQUIREMENTS. (A) EACH LICENSEE SHALL MAINTAIN AT  ALL
 TIMES  SUCH  CAPITAL  IN AN AMOUNT AND FORM AS THE SUPERINTENDENT DETER-
 MINES IS SUFFICIENT TO ENSURE THE FINANCIAL INTEGRITY OF  SUCH  LICENSEE
 AND  ITS ONGOING OPERATIONS BASED ON AN ASSESSMENT OF THE SPECIFIC RISKS
 APPLICABLE TO EACH LICENSEE. IN DETERMINING THE MINIMUM AMOUNT OF  CAPI-
 TAL  THAT  SHALL  BE  MAINTAINED  BY  A LICENSEE, THE SUPERINTENDENT MAY
 CONSIDER A VARIETY OF FACTORS, INCLUDING BUT NOT LIMITED TO:
   (1) THE COMPOSITION OF SUCH LICENSEE'S  TOTAL  ASSETS,  INCLUDING  THE
 POSITION,  SIZE,  LIQUIDITY, RISK EXPOSURE, AND PRICE VOLATILITY OF EACH
 TYPE OF ASSET;
   (2) THE COMPOSITION OF SUCH LICENSEE'S  TOTAL  LIABILITIES,  INCLUDING
 THE SIZE AND REPAYMENT TIMING OF EACH TYPE OF LIABILITY;
   (3) THE ACTUAL AND EXPECTED VOLUME OF SUCH LICENSEE'S VIRTUAL CURRENCY
 BUSINESS ACTIVITY;
   (4)  WHETHER  SUCH  LICENSEE  IS  ALREADY LICENSED OR REGULATED BY THE
 SUPERINTENDENT UNDER THIS CHAPTER, THE BANKING  LAW,  OR  THE  INSURANCE
 LAW,  OR  OTHERWISE  SUBJECT  TO  SUCH LAWS AS A PROVIDER OF A FINANCIAL
 PRODUCT OR SERVICE, AND WHETHER SUCH LICENSEE IS  IN  GOOD  STANDING  IN
 SUCH CAPACITY;
   (5) THE AMOUNT OF LEVERAGE EMPLOYED BY SUCH LICENSEE;
   (6) THE LIQUIDITY POSITION OF SUCH LICENSEE;
   (7)  THE  FINANCIAL  PROTECTION  THAT  SUCH  LICENSEE PROVIDES FOR ITS
 CUSTOMERS THROUGH ITS TRUST ACCOUNT OR BOND;
   (8) THE TYPES OF ENTITIES TO BE SERVICED BY SUCH LICENSEE; AND
 A. 8813                             8
 
   (9) THE TYPES OF PRODUCTS OR SERVICES TO BE OFFERED BY SUCH LICENSEE.
   (B)  EACH  LICENSEE  SHALL  HOLD  CAPITAL REQUIRED TO BE MAINTAINED IN
 ACCORDANCE WITH THIS SECTION IN THE FORM OF CASH, VIRTUAL  CURRENCY,  OR
 HIGH-QUALITY,   HIGHLY   LIQUID,   INVESTMENT-GRADE   ASSETS,   IN  SUCH
 PROPORTIONS AS ARE ACCEPTABLE TO THE SUPERINTENDENT.
   § 1008. CUSTODY AND PROTECTION OF CUSTOMER ASSETS. (A)  EACH  LICENSEE
 SHALL  MAINTAIN  A SURETY BOND OR TRUST ACCOUNT IN UNITED STATES DOLLARS
 FOR THE BENEFIT OF ITS CUSTOMERS IN SUCH FORM AND AMOUNT AS IS  ACCEPTA-
 BLE  TO THE SUPERINTENDENT FOR THE PROTECTION OF SUCH LICENSEE'S CUSTOM-
 ERS. TO THE EXTENT A LICENSEE MAINTAINS A TRUST  ACCOUNT  IN  ACCORDANCE
 WITH  THIS SECTION, SUCH TRUST ACCOUNT SHALL BE MAINTAINED WITH A QUALI-
 FIED CUSTODIAN.
   (B) TO THE EXTENT A LICENSEE STORES, HOLDS, OR  MAINTAINS  CUSTODY  OR
 CONTROL  OF  VIRTUAL CURRENCY ON BEHALF OF ANOTHER PERSON, SUCH LICENSEE
 SHALL HOLD VIRTUAL CURRENCY OF THE SAME TYPE AND AMOUNT AS THAT WHICH IS
 OWED OR OBLIGATED TO SUCH OTHER PERSON.
   (C) EACH LICENSEE IS PROHIBITED FROM SELLING, TRANSFERRING, ASSIGNING,
 LENDING, HYPOTHECATING, PLEDGING,  OR  OTHERWISE  USING  OR  ENCUMBERING
 ASSETS,  INCLUDING  VIRTUAL CURRENCY, STORED, HELD, OR MAINTAINED BY, OR
 UNDER THE CUSTODY OR CONTROL OF, SUCH  LICENSEE  ON  BEHALF  OF  ANOTHER
 PERSON  EXCEPT  FOR  THE SALE, TRANSFER, OR ASSIGNMENT OF SUCH ASSETS AT
 THE DIRECTION OF SUCH OTHER PERSON.
   § 1009. MATERIAL CHANGE TO BUSINESS. (A) EACH  LICENSEE  SHALL  OBTAIN
 THE  SUPERINTENDENT'S PRIOR WRITTEN APPROVAL FOR ANY PLAN OR PROPOSAL TO
 INTRODUCE OR OFFER A MATERIALLY NEW PRODUCT, SERVICE, OR ACTIVITY, OR TO
 MAKE A MATERIAL CHANGE TO AN EXISTING  PRODUCT,  SERVICE,  OR  ACTIVITY,
 INVOLVING NEW YORK STATE OR NEW YORK STATE RESIDENTS.
   (B)  FOR  THE  PURPOSES  OF  THIS  SECTION, A "MATERIALLY NEW PRODUCT,
 SERVICE, OR ACTIVITY" OR A "MATERIAL CHANGE" MAY OCCUR WHERE:
   (1) THE PROPOSED NEW PRODUCT, SERVICE, OR ACTIVITY,  OR  THE  PROPOSED
 CHANGE MAY RAISE A LEGAL OR REGULATORY ISSUE ABOUT THE PERMISSIBILITY OF
 SUCH PRODUCT, SERVICE, OR ACTIVITY;
   (2)  THE  PROPOSED  NEW PRODUCT, SERVICE, OR ACTIVITY, OR THE PROPOSED
 CHANGE MAY RAISE SAFETY AND SOUNDNESS OR OPERATIONAL CONCERNS; OR
   (3) A CHANGE IS PROPOSED TO AN EXISTING PRODUCT, SERVICE, OR  ACTIVITY
 THAT  MAY  CAUSE  SUCH  PRODUCT,  SERVICE,  OR ACTIVITY TO BE MATERIALLY
 DIFFERENT FROM THAT PREVIOUSLY LISTED ON THE APPLICATION  FOR  LICENSING
 BY THE SUPERINTENDENT.
   (C)  THE  LICENSEE SHALL SUBMIT A WRITTEN PLAN DESCRIBING THE PROPOSED
 MATERIALLY NEW PRODUCT, SERVICE, OR ACTIVITY, OR THE  PROPOSED  MATERIAL
 CHANGE,  INCLUDING  A  DETAILED  DESCRIPTION OF THE BUSINESS OPERATIONS,
 COMPLIANCE POLICIES, AND THE IMPACT  ON  THE  OVERALL  BUSINESS  OF  THE
 LICENSEE,  AS  WELL AS SUCH OTHER INFORMATION AS REQUESTED BY THE SUPER-
 INTENDENT.
   (D) IF A LICENSEE HAS ANY  QUESTIONS  ABOUT  THE  MATERIALITY  OF  ANY
 PROPOSED  NEW  PRODUCT, SERVICE, OR ACTIVITY, OR OF ANY PROPOSED CHANGE,
 SUCH LICENSEE MAY SEEK CLARIFICATION FROM THE DEPARTMENT PRIOR TO INTRO-
 DUCING OR OFFERING SUCH NEW PRODUCT, SERVICE, OR ACTIVITY OR MAKING SUCH
 CHANGE.
   (E) THE SUPERINTENDENT SHALL PROMPTLY REVIEW A REQUEST BY  A  LICENSEE
 TO  APPROVE A MATERIALLY NEW PRODUCT, SERVICE, OR ACTIVITY PROVIDED BY A
 LICENSEE PURSUANT TO SUBSECTION (A) OF  THIS  SECTION,  AND  APPROVE  OR
 DISAPPROVE  SUCH  PROPOSED  PRODUCT,  SERVICE,  OR  ACTIVITY  WITHIN ONE
 HUNDRED EIGHTY DAYS OF RECEIVING SUCH REQUEST. AN APPLICATION  SHALL  BE
 PROMULGATED BY THE DEPARTMENT TO FACILITATE SUCH REQUESTS. ANY DENIAL OF
 SUCH  REQUEST  FOR APPROVAL BY A PROPOSED TRUST COMPANY SHALL BE REVIEW-
 A. 8813                             9
 
 ABLE UPON APPLICATION BEFORE A JUDGE IN A COURT OF  COMPETENT  JURISDIC-
 TION.  ANY  REQUEST  TO  APPROVE  A  MATERIALLY NEW PRODUCT, SERVICE, OR
 ACTIVITY MADE PURSUANT TO THIS SUBDIVISION  WHICH  IS  NOT  APPROVED  OR
 DISAPPROVED  BY  THE  SUPERINTENDENT  WITHIN  ONE HUNDRED EIGHTY DAYS OF
 RECEIPT OF SUCH REQUEST SHALL BE DEEMED APPROVED.
   (F) PROVIDED THAT A REQUEST BY A LIMITED  PURPOSE  TRUST  COMPANY  FOR
 APPROVAL  OF  A  MATERIALLY  NEW  PRODUCT, SERVICE, OR ACTIVITY HAS BEEN
 GRANTED BY THE SUPERINTENDENT OR DEEMED APPROVED,  NO  FURTHER  APPROVAL
 SHALL BE REQUIRED TO PROVIDE SUCH PRODUCT, SERVICE, OR ACTIVITY TO ADDI-
 TIONAL  CUSTOMERS,  WHETHER  SUCH  CUSTOMERS RESIDE IN OR OUTSIDE OF NEW
 YORK STATE.
   § 1010. CHANGE OF CONTROL; MERGERS AND  ACQUISITIONS.  (A)  NO  ACTION
 SHALL  BE  TAKEN,  EXCEPT  WITH THE PRIOR WRITTEN APPROVAL OF THE SUPER-
 INTENDENT, THAT MAY RESULT IN A CHANGE OF CONTROL OF A LICENSEE.
   (1) PRIOR TO ANY CHANGE OF CONTROL,  THE  PERSON  SEEKING  TO  ACQUIRE
 CONTROL  OF  A LICENSEE SHALL SUBMIT A WRITTEN APPLICATION TO THE SUPER-
 INTENDENT IN A FORM AND  SUBSTANCE  ACCEPTABLE  TO  THE  SUPERINTENDENT,
 INCLUDING  BUT  NOT  LIMITED TO DETAILED INFORMATION ABOUT THE APPLICANT
 AND ALL DIRECTORS, PRINCIPAL OFFICERS, PRINCIPAL STOCKHOLDERS, AND PRIN-
 CIPAL BENEFICIARIES OF THE APPLICANT, AS APPLICABLE.
   (2) FOR PURPOSES  OF  THIS  SECTION,  THE  TERM  "CONTROL"  MEANS  THE
 POSSESSION,  DIRECTLY OR INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE
 DIRECTION OF THE MANAGEMENT AND POLICIES OF A LICENSEE  WHETHER  THROUGH
 THE  OWNERSHIP  OF  STOCK OF SUCH LICENSEE, THE STOCK OF ANY PERSON THAT
 POSSESSES SUCH POWER, OR OTHERWISE. CONTROL SHALL BE PRESUMED  TO  EXIST
 IF A PERSON, DIRECTLY OR INDIRECTLY, OWNS, CONTROLS, OR HOLDS WITH POWER
 TO  VOTE TEN PERCENT OR MORE OF THE VOTING STOCK OF A LICENSEE OR OF ANY
 PERSON THAT OWNS, CONTROLS, OR HOLDS WITH POWER TO VOTE TEN  PERCENT  OR
 MORE  OF THE VOTING STOCK OF SUCH LICENSEE. NO PERSON SHALL BE DEEMED TO
 CONTROL ANOTHER PERSON SOLELY BY REASON OF SUCH PERSON'S BEING AN  OFFI-
 CER OR DIRECTOR OF SUCH OTHER PERSON.
   (3)  THE SUPERINTENDENT MAY DETERMINE UPON APPLICATION THAT ANY PERSON
 DOES NOT OR WILL NOT UPON THE TAKING OF  SOME  PROPOSED  ACTION  CONTROL
 ANOTHER  PERSON.  SUCH DETERMINATION SHALL BE MADE WITHIN THIRTY DAYS OR
 SUCH FURTHER PERIOD AS THE SUPERINTENDENT MAY PRESCRIBE. THE  FILING  OF
 AN  APPLICATION  PURSUANT TO THIS SUBSECTION IN GOOD FAITH BY ANY PERSON
 SHALL RELIEVE THE APPLICANT FROM ANY OBLIGATION OR LIABILITY IMPOSED  BY
 THIS  SECTION  WITH RESPECT TO THE SUBJECT OF SUCH APPLICATION UNTIL THE
 SUPERINTENDENT HAS ACTED UPON SUCH APPLICATION. THE  SUPERINTENDENT  MAY
 REVOKE  OR  MODIFY  THE SUPERINTENDENT'S DETERMINATION, AFTER NOTICE AND
 OPPORTUNITY TO BE HEARD, WHENEVER IN THE SUPERINTENDENT'S JUDGMENT REVO-
 CATION OR MODIFICATION IS CONSISTENT WITH THIS ARTICLE. THE  SUPERINTEN-
 DENT MAY CONSIDER THE FOLLOWING FACTORS IN MAKING SUCH A DETERMINATION:
   (A)  WHETHER SUCH PERSON'S PURCHASE OF COMMON STOCK IS MADE SOLELY FOR
 INVESTMENT PURPOSES AND NOT TO ACQUIRE CONTROL OVER THE LICENSEE;
   (B) WHETHER SUCH PERSON COULD DIRECT, OR CAUSE THE DIRECTION  OF,  THE
 MANAGEMENT OR POLICIES OF THE LICENSEE;
   (C) WHETHER SUCH PERSON COULD PROPOSE DIRECTORS IN OPPOSITION TO NOMI-
 NEES PROPOSED BY THE MANAGEMENT OR BOARD OF DIRECTORS OF THE LICENSEE;
   (D)  WHETHER  SUCH  PERSON  COULD SEEK OR ACCEPT REPRESENTATION ON THE
 BOARD OF DIRECTORS OF THE LICENSEE;
   (E) WHETHER SUCH PERSON COULD SOLICIT  OR  PARTICIPATE  IN  SOLICITING
 PROXY  VOTES WITH RESPECT TO ANY MATTER PRESENTED TO THE SHAREHOLDERS OF
 THE LICENSEE; OR
   (F) ANY OTHER FACTOR THAT INDICATES SUCH PERSON  WOULD  OR  WOULD  NOT
 EXERCISE CONTROL OF THE LICENSEE.
 A. 8813                            10
 
   (4)  THE  SUPERINTENDENT SHALL APPROVE OR DENY EVERY APPLICATION FOR A
 CHANGE OF CONTROL OF A LICENSEE HEREUNDER WITHIN ONE HUNDRED TWENTY DAYS
 FROM THE FILING OF AN APPLICATION DEEMED BY  THE  SUPERINTENDENT  TO  BE
 COMPLETE.  SUCH PERIOD OF ONE HUNDRED TWENTY DAYS MAY BE EXTENDED BY THE
 SUPERINTENDENT,  FOR  GOOD  CAUSE  SHOWN, FOR SUCH ADDITIONAL REASONABLE
 PERIOD OF TIME AS MAY BE REQUIRED TO ENABLE COMPLIANCE WITH THE REQUIRE-
 MENTS AND CONDITIONS OF THIS ARTICLE.
   (5) IN DETERMINING WHETHER TO APPROVE A PROPOSED  CHANGE  OF  CONTROL,
 THE  SUPERINTENDENT  SHALL, AMONG OTHER FACTORS, TAKE INTO CONSIDERATION
 THE PUBLIC INTEREST AND THE NEEDS AND CONVENIENCE OF THE PUBLIC.
   (B) NO ACTION SHALL BE TAKEN, EXCEPT WITH THE PRIOR  WRITTEN  APPROVAL
 OF THE SUPERINTENDENT, THAT MAY RESULT IN A MERGER OR ACQUISITION OF ALL
 OR A SUBSTANTIAL PART OF THE ASSETS OF A LICENSEE.
   (1) PRIOR TO ANY SUCH MERGER OR ACQUISITION, AN APPLICATION CONTAINING
 A WRITTEN PLAN OF MERGER OR ACQUISITION SHALL BE SUBMITTED TO THE SUPER-
 INTENDENT  BY THE ENTITIES THAT ARE TO MERGE OR BY THE ACQUIRING ENTITY,
 AS APPLICABLE. SUCH PLAN SHALL BE IN FORM AND SUBSTANCE SATISFACTORY  TO
 THE  SUPERINTENDENT,  AND  SHALL  SPECIFY  EACH ENTITY TO BE MERGED, THE
 SURVIVING ENTITY, OR THE ENTITY ACQUIRING ALL OR  SUBSTANTIALLY  ALL  OF
 THE  ASSETS OF THE LICENSEE, AS APPLICABLE, AND SHALL DESCRIBE THE TERMS
 AND CONDITIONS OF THE MERGER OR ACQUISITION AND THE MODE OF CARRYING  IT
 INTO EFFECT.
   (2)  THE  SUPERINTENDENT  SHALL APPROVE OR DENY A PROPOSED MERGER OR A
 PROPOSED ACQUISITION OF ALL OR A SUBSTANTIAL PART OF  THE  ASSETS  OF  A
 LICENSEE  WITHIN ONE HUNDRED TWENTY DAYS AFTER THE FILING OF AN APPLICA-
 TION THAT CONTAINS A WRITTEN PLAN OF MERGER OR ACQUISITION AND IS DEEMED
 BY THE SUPERINTENDENT TO BE COMPLETE. SUCH PERIOD OF ONE HUNDRED  TWENTY
 DAYS  MAY  BE  EXTENDED BY THE SUPERINTENDENT, FOR GOOD CAUSE SHOWN, FOR
 SUCH ADDITIONAL REASONABLE PERIOD OF TIME AS MAY BE REQUIRED  TO  ENABLE
 COMPLIANCE WITH THE REQUIREMENTS AND CONDITIONS OF THIS ARTICLE.
   (3) IN DETERMINING WHETHER TO SO APPROVE A PROPOSED MERGER OR ACQUISI-
 TION, THE SUPERINTENDENT SHALL, AMONG OTHER FACTORS, TAKE INTO CONSIDER-
 ATION THE PUBLIC INTEREST AND THE NEEDS AND CONVENIENCE OF THE PUBLIC.
   § 1011. BOOKS AND RECORDS. (A) EACH LICENSEE SHALL, IN CONNECTION WITH
 ITS  VIRTUAL CURRENCY BUSINESS ACTIVITY, MAKE, KEEP, AND PRESERVE ALL OF
 ITS BOOKS AND RECORDS IN THEIR ORIGINAL FORM OR NATIVE FILE FORMAT FOR A
 PERIOD OF AT LEAST SEVEN YEARS FROM THE DATE OF THEIR CREATION AND IN  A
 CONDITION  THAT  WILL ALLOW THE SUPERINTENDENT TO DETERMINE WHETHER SUCH
 LICENSEE IS COMPLYING WITH ALL APPLICABLE LAWS, RULES, AND  REGULATIONS.
 THE BOOKS AND RECORDS MAINTAINED BY EACH LICENSEE SHALL, WITHOUT LIMITA-
 TION, INCLUDE:
   (1)  FOR  EACH  TRANSACTION, THE AMOUNT, DATE, AND PRECISE TIME OF THE
 TRANSACTION, ANY PAYMENT INSTRUCTIONS, THE  TOTAL  AMOUNT  OF  FEES  AND
 CHARGES  RECEIVED AND PAID TO, BY, OR ON BEHALF OF THE LICENSEE, AND THE
 NAMES, ACCOUNT NUMBERS, AND PHYSICAL ADDRESSES OF:
   (A) THE PARTY OR PARTIES TO THE  TRANSACTION  THAT  ARE  CUSTOMERS  OR
 ACCOUNTHOLDERS OF THE LICENSEE; AND
   (B) TO THE EXTENT PRACTICABLE, ANY OTHER PARTIES TO THE TRANSACTION;
   (2)  A GENERAL LEDGER CONTAINING ALL ASSET, LIABILITY, OWNERSHIP EQUI-
 TY, INCOME, AND EXPENSE ACCOUNTS;
   (3) BANK STATEMENTS AND BANK RECONCILIATION RECORDS;
   (4) ANY STATEMENTS OR VALUATIONS SENT OR  PROVIDED  TO  CUSTOMERS  AND
 COUNTERPARTIES;
   (5)  RECORDS  OR  MINUTES  OF MEETINGS OF THE BOARD OF DIRECTORS OR AN
 EQUIVALENT GOVERNING BODY;
 A. 8813                            11
 
   (6) RECORDS DEMONSTRATING COMPLIANCE WITH APPLICABLE STATE AND FEDERAL
 ANTI-MONEY LAUNDERING LAWS, RULES, AND REGULATIONS,  INCLUDING  CUSTOMER
 IDENTIFICATION  AND VERIFICATION DOCUMENTS, RECORDS LINKING CUSTOMERS TO
 THEIR RESPECTIVE ACCOUNTS AND BALANCES, AND A RECORD OF  ALL  COMPLIANCE
 BREACHES;
   (7)  COMMUNICATIONS  AND  DOCUMENTATION  RELATED  TO INVESTIGATIONS OF
 CUSTOMER COMPLAINTS AND TRANSACTION ERROR RESOLUTION OR CONCERNING FACTS
 GIVING RISE TO POSSIBLE VIOLATIONS OF LAWS, RULES, OR REGULATIONS;
   (8) ALL OTHER RECORDS REQUIRED TO BE  MAINTAINED  IN  ACCORDANCE  WITH
 THIS ARTICLE; AND
   (9) ALL OTHER RECORDS AS THE SUPERINTENDENT MAY REQUIRE.
   (B)  EACH LICENSEE SHALL PROVIDE THE DEPARTMENT, UPON REQUEST, IMMEDI-
 ATE ACCESS TO ALL FACILITIES, BOOKS, RECORDS, DOCUMENTS, OR OTHER INFOR-
 MATION MAINTAINED BY SUCH LICENSEE OR ITS AFFILIATES, WHEREVER LOCATED.
   (C) RECORDS OF NON-COMPLETED, OUTSTANDING, OR INACTIVE VIRTUAL CURREN-
 CY ACCOUNTS OR TRANSACTIONS SHALL BE MAINTAINED FOR AT LEAST FIVE  YEARS
 AFTER THE TIME WHEN ANY SUCH VIRTUAL CURRENCY HAS BEEN DEEMED, UNDER THE
 ABANDONED PROPERTY LAW, TO BE ABANDONED PROPERTY.
   §  1012.  EXAMINATIONS.  (A) EACH LICENSEE SHALL PERMIT AND ASSIST THE
 SUPERINTENDENT TO EXAMINE SUCH LICENSEE WHENEVER IN THE SUPERINTENDENT'S
 JUDGMENT SUCH EXAMINATION IS NECESSARY OR ADVISABLE, BUT NOT  LESS  THAN
 ONCE  EVERY TWO CALENDAR YEARS, INCLUDING, WITHOUT LIMITATION, TO DETER-
 MINE:
   (1) THE FINANCIAL CONDITION OF THE LICENSEE;
   (2) THE SAFETY AND SOUNDNESS OF THE CONDUCT OF ITS BUSINESS;
   (3) THE POLICIES OF ITS MANAGEMENT;
   (4) WHETHER THE LICENSEE HAS COMPLIED WITH THE REQUIREMENTS  OF  LAWS,
 RULES, AND REGULATIONS; AND
   (5) SUCH OTHER MATTERS AS THE SUPERINTENDENT MAY DETERMINE, INCLUDING,
 BUT  NOT LIMITED TO, ANY ACTIVITIES OF THE LICENSEE OUTSIDE THE STATE OF
 NEW YORK IF IN THE OPINION OF THE  SUPERINTENDENT  SUCH  ACTIVITIES  MAY
 AFFECT THE LICENSEE'S VIRTUAL CURRENCY BUSINESS ACTIVITY.
   (B)  EACH  LICENSEE  SHALL PERMIT AND ASSIST THE SUPERINTENDENT AT ANY
 TIME TO EXAMINE ALL OF SUCH LICENSEE'S BOOKS, RECORDS,  ACCOUNTS,  DOCU-
 MENTS, AND OTHER INFORMATION.
   (C)  EACH  LICENSEE SHALL PERMIT AND ASSIST THE SUPERINTENDENT TO MAKE
 SUCH SPECIAL INVESTIGATIONS AS THE SUPERINTENDENT SHALL  DEEM  NECESSARY
 TO  DETERMINE  WHETHER  SUCH  LICENSEE HAS VIOLATED ANY PROVISION OF THE
 APPLICABLE LAWS, RULES, OR REGULATIONS AND TO THE EXTENT NECESSARY SHALL
 PERMIT AND ASSIST THE SUPERINTENDENT TO EXAMINE ALL RELEVANT FACILITIES,
 BOOKS, RECORDS, ACCOUNTS, DOCUMENTS, AND OTHER INFORMATION.
   (D) FOR THE PURPOSE OF DETERMINING  THE  FINANCIAL  CONDITION  OF  THE
 LICENSEE, ITS SAFETY AND SOUNDNESS PRACTICES, OR WHETHER IT HAS COMPLIED
 WITH  THE  REQUIREMENTS  OF  LAWS,  RULES, AND REGULATIONS, THE LICENSEE
 SHALL PERMIT AND ASSIST THE SUPERINTENDENT, WHEN IN THE SUPERINTENDENT'S
 JUDGMENT IT IS NECESSARY OR ADVISABLE, TO EXAMINE AN  AFFILIATE  OF  THE
 LICENSEE.
   §  1013.  REPORTS  AND  FINANCIAL DISCLOSURES. (A) EACH LICENSEE SHALL
 SUBMIT TO  THE  SUPERINTENDENT  QUARTERLY  FINANCIAL  STATEMENTS  WITHIN
 FORTY-FIVE DAYS FOLLOWING THE CLOSE OF SUCH LICENSEE'S FISCAL QUARTER IN
 THE  FORM,  AND CONTAINING SUCH INFORMATION, AS THE SUPERINTENDENT SHALL
 PRESCRIBE, INCLUDING, WITHOUT LIMITATION, THE FOLLOWING INFORMATION:
   (1) A STATEMENT OF THE FINANCIAL CONDITION OF SUCH LICENSEE, INCLUDING
 A BALANCE SHEET, INCOME STATEMENT, STATEMENT  OF  COMPREHENSIVE  INCOME,
 STATEMENT OF CHANGE IN OWNERSHIP EQUITY, CASH FLOW STATEMENT, AND STATE-
 MENT OF NET LIQUID ASSETS;
 A. 8813                            12
 
   (2)  A  STATEMENT DEMONSTRATING COMPLIANCE WITH ANY FINANCIAL REQUIRE-
 MENTS ESTABLISHED UNDER THIS ARTICLE;
   (3) FINANCIAL PROJECTIONS AND STRATEGIC BUSINESS PLANS;
   (4) A LIST OF ALL OFF-BALANCE SHEET ITEMS;
   (5) A CHART OF ACCOUNTS, INCLUDING A DESCRIPTION OF EACH ACCOUNT; AND
   (6)  A REPORT OF PERMISSIBLE INVESTMENTS BY SUCH LICENSEE AS PERMITTED
 UNDER THIS ARTICLE.
   (B) EACH LICENSEE SHALL SUBMIT AUDITED  ANNUAL  FINANCIAL  STATEMENTS,
 TOGETHER  WITH AN OPINION AND AN ATTESTATION BY AN INDEPENDENT CERTIFIED
 PUBLIC ACCOUNTANT REGARDING THE EFFECTIVENESS OF SUCH LICENSEE'S  INTER-
 NAL  CONTROL  STRUCTURE.  ALL  SUCH  ANNUAL  FINANCIAL  STATEMENTS SHALL
 INCLUDE:
   (1) A STATEMENT OF MANAGEMENT'S  RESPONSIBILITIES  FOR  PREPARING  THE
 LICENSEE'S  ANNUAL  FINANCIAL  STATEMENTS,  ESTABLISHING AND MAINTAINING
 ADEQUATE INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL  REPORTING,  AND
 COMPLYING WITH ALL APPLICABLE LAWS, RULES, AND REGULATIONS;
   (2) AN ASSESSMENT BY MANAGEMENT OF THE LICENSEE'S COMPLIANCE WITH SUCH
 APPLICABLE  LAWS,  RULES, AND REGULATIONS DURING THE FISCAL YEAR COVERED
 BY THE FINANCIAL STATEMENTS; AND
   (3) CERTIFICATION OF THE FINANCIAL STATEMENTS BY AN OFFICER OR  DIREC-
 TOR  OF  THE  LICENSEE  ATTESTING  TO  THE TRUTH AND CORRECTNESS OF SUCH
 STATEMENTS.
   (C) EACH LICENSEE SHALL NOTIFY THE SUPERINTENDENT IN  WRITING  OF  ANY
 CRIMINAL ACTION OR INSOLVENCY PROCEEDING AGAINST SUCH LICENSEE OR ANY OF
 ITS DIRECTORS, PRINCIPAL STOCKHOLDERS, PRINCIPAL OFFICERS, AND PRINCIPAL
 BENEFICIARIES,  AS APPLICABLE, IMMEDIATELY AFTER THE COMMENCEMENT OF ANY
 SUCH ACTION OR PROCEEDING.
   (D) EACH LICENSEE SHALL NOTIFY THE SUPERINTENDENT IN  WRITING  OF  ANY
 PROPOSED CHANGE TO THE METHODOLOGY USED TO CALCULATE THE VALUE OF VIRTU-
 AL  CURRENCY  IN  FIAT  CURRENCY THAT WAS SUBMITTED TO THE DEPARTMENT IN
 ACCORDANCE WITH SECTION ONE THOUSAND THREE OF THIS ARTICLE.
   (E) EACH LICENSEE SHALL SUBMIT A REPORT TO  THE  SUPERINTENDENT  IMME-
 DIATELY  UPON  THE DISCOVERY OF ANY VIOLATION OR BREACH OF LAW, RULE, OR
 REGULATION RELATED TO THE CONDUCT OF ACTIVITY LICENSED UNDER THIS  ARTI-
 CLE.
   (F)  EACH LICENSEE SHALL MAKE ADDITIONAL SPECIAL REPORTS TO THE SUPER-
 INTENDENT, AT SUCH TIMES AND IN SUCH FORM,  AS  THE  SUPERINTENDENT  MAY
 REQUEST.
   § 1014. ANTI-MONEY LAUNDERING PROGRAM. (A) ALL VALUES IN UNITED STATES
 DOLLARS REFERENCED IN THIS SECTION SHALL BE CALCULATED USING THE METHOD-
 OLOGY  TO  DETERMINE  THE  VALUE  OF  VIRTUAL  CURRENCY IN FIAT CURRENCY
 PROVIDED TO THE DEPARTMENT UNDER THIS ARTICLE.
   (B) EACH LICENSEE SHALL CONDUCT AN INITIAL RISK ASSESSMENT THAT  SHALL
 CONSIDER LEGAL, COMPLIANCE, FINANCIAL, AND REPUTATIONAL RISKS ASSOCIATED
 WITH  SUCH  LICENSEE'S  ACTIVITIES, SERVICES, CUSTOMERS, COUNTERPARTIES,
 AND GEOGRAPHIC LOCATION AND SHALL ESTABLISH, MAINTAIN,  AND  ENFORCE  AN
 ANTI-MONEY LAUNDERING PROGRAM BASED THEREON. SUCH LICENSEE SHALL CONDUCT
 ADDITIONAL  ASSESSMENTS  ON AN ANNUAL BASIS, OR MORE FREQUENTLY AS RISKS
 CHANGE, AND SHALL MODIFY ITS ANTI-MONEY LAUNDERING PROGRAM AS  APPROPRI-
 ATE TO REFLECT ANY SUCH CHANGES.
   (C)  THE  ANTI-MONEY LAUNDERING PROGRAM ESTABLISHED UNDER THIS SECTION
 SHALL, AT A MINIMUM:
   (1) PROVIDE FOR A SYSTEM OF INTERNAL CONTROLS,  POLICIES,  AND  PROCE-
 DURES DESIGNED TO ENSURE ONGOING COMPLIANCE WITH ALL APPLICABLE ANTI-MO-
 NEY LAUNDERING LAWS, RULES, AND REGULATIONS;
 A. 8813                            13
 
   (2)  PROVIDE  FOR  INDEPENDENT  TESTING  FOR  COMPLIANCE WITH, AND THE
 EFFECTIVENESS OF, THE ANTI-MONEY LAUNDERING  PROGRAM  ESTABLISHED  UNDER
 THIS  SECTION  TO  BE  CONDUCTED  BY QUALIFIED INTERNAL PERSONNEL OF THE
 LICENSEE, WHO ARE NOT RESPONSIBLE FOR THE DESIGN, INSTALLATION,  MAINTE-
 NANCE,  OR  OPERATION  OF  THE ANTI-MONEY LAUNDERING PROGRAM ESTABLISHED
 UNDER THIS SECTION, OR THE POLICIES AND PROCEDURES THAT GUIDE ITS OPERA-
 TION, OR A QUALIFIED EXTERNAL PARTY, AT LEAST ANNUALLY, THE FINDINGS  OF
 WHICH  SHALL  BE  SUMMARIZED IN A WRITTEN REPORT SUBMITTED TO THE SUPER-
 INTENDENT;
   (3) DESIGNATE A QUALIFIED  INDIVIDUAL  OR  INDIVIDUALS  IN  COMPLIANCE
 RESPONSIBLE  FOR  COORDINATING AND MONITORING DAY-TO-DAY COMPLIANCE WITH
 THE ANTI-MONEY LAUNDERING PROGRAM ESTABLISHED UNDER THIS SECTION; AND
   (4) PROVIDE ONGOING TRAINING FOR APPROPRIATE PERSONNEL TO ENSURE  THEY
 HAVE  A  FULSOME UNDERSTANDING OF ANTI-MONEY LAUNDERING REQUIREMENTS AND
 TO ENABLE THEM TO IDENTIFY TRANSACTIONS  REQUIRED  TO  BE  REPORTED  AND
 MAINTAIN RECORDS REQUIRED TO BE KEPT IN ACCORDANCE WITH THIS ARTICLE.
   (D)  THE  ANTI-MONEY LAUNDERING PROGRAM ESTABLISHED UNDER THIS SECTION
 SHALL INCLUDE  A  WRITTEN  ANTI-MONEY  LAUNDERING  POLICY  REVIEWED  AND
 APPROVED  BY  THE  LICENSEE'S BOARD OF DIRECTORS OR EQUIVALENT GOVERNING
 BODY.
   (E) EACH LICENSEE, AS PART OF ITS ANTI-MONEY LAUNDERING PROGRAM ESTAB-
 LISHED UNDER THIS SECTION, SHALL MAINTAIN RECORDS AND  MAKE  REPORTS  IN
 THE MANNER SET FORTH BELOW.
   (1)  EACH  LICENSEE  SHALL  MAINTAIN THE FOLLOWING INFORMATION FOR ALL
 VIRTUAL CURRENCY TRANSACTIONS INVOLVING THE PAYMENT, RECEIPT,  EXCHANGE,
 CONVERSION, PURCHASE, SALE, TRANSFER, OR TRANSMISSION OF VIRTUAL CURREN-
 CY:
   (A) THE IDENTITY AND PHYSICAL ADDRESSES OF THE PARTY OR PARTIES TO THE
 TRANSACTION THAT ARE CUSTOMERS OR ACCOUNTHOLDERS OF THE LICENSEE AND, TO
 THE EXTENT PRACTICABLE, ANY OTHER PARTIES TO THE TRANSACTION;
   (B)  THE AMOUNT OR VALUE OF THE TRANSACTION, INCLUDING IN WHAT DENOMI-
 NATION PURCHASED, SOLD, OR TRANSFERRED;
   (C) THE METHOD OF PAYMENT;
   (D) THE DATE OR DATES ON  WHICH  THE  TRANSACTION  WAS  INITIATED  AND
 COMPLETED; AND
   (E) A DESCRIPTION OF THE TRANSACTION.
   (2)  WHEN  A  LICENSEE  IS  INVOLVED  IN A VIRTUAL CURRENCY TO VIRTUAL
 CURRENCY TRANSACTION OR SERIES OF VIRTUAL CURRENCY TO  VIRTUAL  CURRENCY
 TRANSACTIONS  THAT  ARE  NOT  SUBJECT  TO CURRENCY TRANSACTION REPORTING
 REQUIREMENTS UNDER FEDERAL LAW, INCLUDING TRANSACTIONS FOR THE  PAYMENT,
 RECEIPT, EXCHANGE, CONVERSION, PURCHASE, SALE, TRANSFER, OR TRANSMISSION
 OF  VIRTUAL CURRENCY, IN AN AGGREGATE AMOUNT EXCEEDING THE UNITED STATES
 DOLLAR VALUE OF TEN THOUSAND DOLLARS IN ONE DAY,  BY  ONE  PERSON,  SUCH
 LICENSEE  SHALL  NOTIFY  THE  DEPARTMENT,  IN A MANNER PRESCRIBED BY THE
 SUPERINTENDENT, WITHIN TWENTY-FOUR HOURS.
   (3) EACH LICENSEE SHALL MONITOR FOR TRANSACTIONS  THAT  MIGHT  SIGNIFY
 MONEY LAUNDERING, TAX EVASION, OR OTHER ILLEGAL OR CRIMINAL ACTIVITY.
   (A) EACH LICENSEE SHALL FILE SUSPICIOUS ACTIVITY REPORTS IN ACCORDANCE
 WITH APPLICABLE FEDERAL LAWS, RULES, AND REGULATIONS.
   (B) EACH LICENSEE THAT IS NOT SUBJECT TO SUSPICIOUS ACTIVITY REPORTING
 REQUIREMENTS  UNDER FEDERAL LAW SHALL FILE WITH THE SUPERINTENDENT, IN A
 FORM PRESCRIBED BY THE  SUPERINTENDENT,  REPORTS  OF  TRANSACTIONS  THAT
 INDICATE  A  POSSIBLE  VIOLATION OF LAW OR REGULATION WITHIN THIRTY DAYS
 FROM THE DETECTION OF THE FACTS  THAT  CONSTITUTE  A  NEED  FOR  FILING.
 CONTINUING SUSPICIOUS ACTIVITY SHALL BE REVIEWED ON AN ONGOING BASIS AND
 A. 8813                            14
 
 A  SUSPICIOUS  ACTIVITY  REPORT SHALL BE FILED WITHIN ONE HUNDRED TWENTY
 DAYS OF THE LAST FILING DESCRIBING CONTINUING ACTIVITY.
   (F)  NO LICENSEE SHALL STRUCTURE TRANSACTIONS, OR ASSIST IN THE STRUC-
 TURING OF TRANSACTIONS, TO EVADE REPORTING REQUIREMENTS UNDER THIS ARTI-
 CLE.
   (G) NO LICENSEE SHALL ENGAGE IN, FACILITATE, OR  KNOWINGLY  ALLOW  THE
 TRANSFER  OR  TRANSMISSION  OF  VIRTUAL  CURRENCY  WHEN SUCH ACTION WILL
 OBFUSCATE OR CONCEAL THE IDENTITY OF AN INDIVIDUAL CUSTOMER OR  COUNTER-
 PARTY. NOTHING IN THIS SECTION, HOWEVER, SHALL BE CONSTRUED TO REQUIRE A
 LICENSEE  TO  MAKE AVAILABLE TO THE GENERAL PUBLIC THE FACT OR NATURE OF
 THE MOVEMENT OF VIRTUAL CURRENCY BY INDIVIDUAL CUSTOMERS OR  COUNTERPAR-
 TIES.
   (H) EACH LICENSEE SHALL ALSO MAINTAIN, AS PART OF ITS ANTI-MONEY LAUN-
 DERING PROGRAM ESTABLISHED UNDER THIS SECTION, A CUSTOMER IDENTIFICATION
 PROGRAM.
   (1)  WHEN  OPENING AN ACCOUNT FOR, OR ESTABLISHING A SERVICE RELATION-
 SHIP WITH, A CUSTOMER, EACH LICENSEE SHALL, AT A  MINIMUM,  VERIFY  SUCH
 CUSTOMER'S  IDENTITY, TO THE EXTENT REASONABLE AND PRACTICABLE, MAINTAIN
 RECORDS OF THE INFORMATION USED TO VERIFY SUCH IDENTITY, INCLUDING NAME,
 PHYSICAL ADDRESS, AND OTHER IDENTIFYING INFORMATION, AND CHECK CUSTOMERS
 AGAINST THE SPECIALLY DESIGNATED NATIONALS LIST MAINTAINED BY THE OFFICE
 OF FOREIGN ASSETS CONTROL, A PART OF THE UNITED STATES DEPARTMENT OF THE
 TREASURY. ENHANCED DUE DILIGENCE MAY BE  REQUIRED  BASED  ON  ADDITIONAL
 FACTORS,  SUCH  AS  FOR  HIGH-RISK  CUSTOMERS,  HIGH-VOLUME ACCOUNTS, OR
 ACCOUNTS ON WHICH A SUSPICIOUS ACTIVITY REPORT HAS BEEN FILED.
   (2) LICENSEES THAT MAINTAIN ACCOUNTS FOR NON-U.S. PERSONS AND NON-U.S.
 LICENSEES SHALL ESTABLISH ENHANCED DUE DILIGENCE  POLICIES,  PROCEDURES,
 AND  CONTROLS  TO  DETECT MONEY LAUNDERING, INCLUDING ASSESSING THE RISK
 PRESENTED BY SUCH ACCOUNTS BASED ON THE NATURE OF THE FOREIGN  BUSINESS,
 THE  TYPE AND PURPOSE OF THE ACTIVITY, AND THE ANTI-MONEY LAUNDERING AND
 SUPERVISORY REGIME OF THE FOREIGN JURISDICTION.
   (3) LICENSEES ARE PROHIBITED FROM  MAINTAINING  RELATIONSHIPS  OF  ANY
 TYPE  IN  CONNECTION  WITH THEIR VIRTUAL CURRENCY BUSINESS ACTIVITY WITH
 ENTITIES THAT DO NOT HAVE A PHYSICAL PRESENCE IN ANY COUNTRY.
   (4) EACH LICENSEE SHALL REQUIRE VERIFICATION OF THE  IDENTITY  OF  ANY
 ACCOUNTHOLDER  INITIATING  A TRANSACTION WITH A VALUE GREATER THAN THREE
 THOUSAND DOLLARS.
   (I) EACH LICENSEE SHALL DEMONSTRATE THAT IT HAS  RISK-BASED  POLICIES,
 PROCEDURES,  AND PRACTICES TO ENSURE, TO THE MAXIMUM EXTENT PRACTICABLE,
 COMPLIANCE WITH APPLICABLE REGULATIONS ISSUED BY THE OFFICE  OF  FOREIGN
 ASSETS CONTROL.
   (J)  EACH LICENSEE SHALL HAVE IN PLACE APPROPRIATE POLICIES AND PROCE-
 DURES TO BLOCK OR REJECT SPECIFIC  OR  IMPERMISSIBLE  TRANSACTIONS  THAT
 VIOLATE FEDERAL OR STATE LAWS, RULES, OR REGULATIONS.
   (K) THE INDIVIDUAL OR INDIVIDUALS DESIGNATED BY THE LICENSEE, PURSUANT
 TO PARAGRAPH THREE OF SUBSECTION (C) OF THIS SECTION, SHALL BE RESPONSI-
 BLE  FOR  DAY-TO-DAY  OPERATIONS  OF  THE  ANTI-MONEY LAUNDERING PROGRAM
 ESTABLISHED UNDER THIS SECTION AND SHALL, AT A MINIMUM:
   (1) MONITOR CHANGES IN ANTI-MONEY LAUNDERING LAWS,  INCLUDING  UPDATED
 OFFICE  OF  FOREIGN  ASSETS  CONTROL  AND SPECIALLY DESIGNATED NATIONALS
 LISTS, AND UPDATE THE PROGRAM ACCORDINGLY;
   (2) MAINTAIN ALL RECORDS REQUIRED TO BE MAINTAINED UNDER THIS SECTION;
   (3) REVIEW ALL FILINGS REQUIRED UNDER THIS SECTION BEFORE SUBMISSION;
   (4) ESCALATE MATTERS TO THE BOARD OF DIRECTORS, SENIOR MANAGEMENT,  OR
 APPROPRIATE GOVERNING BODY AND SEEK OUTSIDE COUNSEL, AS APPROPRIATE;
 A. 8813                            15
 
   (5)  PROVIDE  PERIODIC  REPORTING,  AT LEAST ANNUALLY, TO THE BOARD OF
 DIRECTORS, SENIOR MANAGEMENT, OR APPROPRIATE GOVERNING BODY; AND
   (6) ENSURE COMPLIANCE WITH RELEVANT TRAINING REQUIREMENTS.
   §  1015. CYBER SECURITY PROGRAM. (A) EACH LICENSEE SHALL ESTABLISH AND
 MAINTAIN AN EFFECTIVE CYBER SECURITY PROGRAM TO ENSURE THE  AVAILABILITY
 AND  FUNCTIONALITY  OF SUCH LICENSEE'S ELECTRONIC SYSTEMS AND TO PROTECT
 SUCH SYSTEMS AND ANY SENSITIVE DATA STORED ON SUCH  SYSTEMS  FROM  UNAU-
 THORIZED ACCESS, USE, OR TAMPERING. SUCH CYBER SECURITY PROGRAM SHALL BE
 DESIGNED TO PERFORM THE FOLLOWING FIVE CORE CYBER SECURITY FUNCTIONS:
   (1) IDENTIFY INTERNAL AND EXTERNAL CYBER RISKS BY, AT A MINIMUM, IDEN-
 TIFYING  THE INFORMATION STORED ON THE LICENSEE'S SYSTEMS, THE SENSITIV-
 ITY OF SUCH INFORMATION, AND HOW AND BY WHOM  SUCH  INFORMATION  MAY  BE
 ACCESSED;
   (2)  PROTECT  THE  LICENSEE'S  ELECTRONIC SYSTEMS, AND THE INFORMATION
 STORED ON SUCH SYSTEMS, FROM UNAUTHORIZED ACCESS, USE,  OR  OTHER  MALI-
 CIOUS ACTS THROUGH THE USE OF DEFENSIVE INFRASTRUCTURE AND THE IMPLEMEN-
 TATION OF POLICIES AND PROCEDURES;
   (3)  DETECT  SYSTEMS INTRUSIONS, DATA BREACHES, UNAUTHORIZED ACCESS TO
 SYSTEMS OR INFORMATION, MALWARE, AND OTHER CYBER SECURITY EVENTS;
   (4) RESPOND TO DETECTED CYBER SECURITY EVENTS TO MITIGATE ANY NEGATIVE
 EFFECTS; AND
   (5) RECOVER FROM CYBER SECURITY EVENTS AND RESTORE  NORMAL  OPERATIONS
 AND SERVICES.
   (B)  EACH  LICENSEE  SHALL  IMPLEMENT  A WRITTEN CYBER SECURITY POLICY
 SETTING FORTH SUCH LICENSEE'S POLICIES AND PROCEDURES FOR THE PROTECTION
 OF ITS ELECTRONIC SYSTEMS AND CUSTOMER AND COUNTERPARTY DATA  STORED  ON
 SUCH  SYSTEMS,  WHICH  SHALL BE REVIEWED AND APPROVED BY SUCH LICENSEE'S
 BOARD OF DIRECTORS OR EQUIVALENT GOVERNING BODY AT LEAST ANNUALLY.  SUCH
 CYBER SECURITY POLICY SHALL ADDRESS THE FOLLOWING AREAS:
   (1) INFORMATION SECURITY;
   (2) DATA GOVERNANCE AND CLASSIFICATION;
   (3) ACCESS CONTROLS;
   (4) BUSINESS CONTINUITY AND DISASTER RECOVERY PLANNING AND RESOURCES;
   (5) CAPACITY AND PERFORMANCE PLANNING;
   (6) SYSTEMS OPERATIONS AND AVAILABILITY CONCERNS;
   (7) SYSTEMS AND NETWORK SECURITY;
   (8) SYSTEMS AND APPLICATION DEVELOPMENT AND QUALITY ASSURANCE;
   (9) PHYSICAL SECURITY AND ENVIRONMENTAL CONTROLS;
   (10) CUSTOMER DATA PRIVACY;
   (11) VENDOR AND THIRD-PARTY SERVICE PROVIDER MANAGEMENT;
   (12) MONITORING AND IMPLEMENTING CHANGES TO CORE PROTOCOLS NOT DIRECT-
 LY CONTROLLED BY THE LICENSEE, AS APPLICABLE; AND
   (13) INCIDENT RESPONSE.
   (C)  EACH  LICENSEE  SHALL  DESIGNATE A QUALIFIED EMPLOYEE TO SERVE AS
 SUCH LICENSEE'S CHIEF INFORMATION SECURITY OFFICER RESPONSIBLE FOR OVER-
 SEEING AND IMPLEMENTING  SUCH  LICENSEE'S  CYBER  SECURITY  PROGRAM  AND
 ENFORCING ITS CYBER SECURITY POLICY.
   (D) EACH LICENSEE SHALL SUBMIT TO THE DEPARTMENT A REPORT, PREPARED BY
 THE  CHIEF INFORMATION SECURITY OFFICER AND PRESENTED TO SUCH LICENSEE'S
 BOARD OF DIRECTORS OR EQUIVALENT  GOVERNING  BODY,  AT  LEAST  ANNUALLY,
 ASSESSING   THE  AVAILABILITY,  FUNCTIONALITY,  AND  INTEGRITY  OF  SUCH
 LICENSEE'S ELECTRONIC SYSTEMS, IDENTIFYING RELEVANT CYBER RISKS TO  SUCH
 LICENSEE,  ASSESSING SUCH LICENSEE'S CYBER SECURITY PROGRAM, AND PROPOS-
 ING STEPS FOR THE REDRESS OF ANY INADEQUACIES IDENTIFIED THEREIN.
   (E) EACH LICENSEE'S  CYBER  SECURITY  PROGRAM  SHALL,  AT  A  MINIMUM,
 INCLUDE AUDIT FUNCTIONS AS SET FORTH BELOW.
 A. 8813                            16
 
   (1)  EACH LICENSEE SHALL CONDUCT PENETRATION TESTING OF ITS ELECTRONIC
 SYSTEMS,  AT  LEAST  ANNUALLY,  AND  VULNERABILITY  ASSESSMENT  OF  SUCH
 SYSTEMS, AT LEAST QUARTERLY.
   (2) EACH LICENSEE SHALL MAINTAIN AUDIT TRAIL SYSTEMS THAT:
   (A)  TRACK AND MAINTAIN DATA THAT ALLOWS FOR THE COMPLETE AND ACCURATE
 RECONSTRUCTION OF ALL FINANCIAL TRANSACTIONS AND ACCOUNTING;
   (B) PROTECT THE INTEGRITY OF DATA STORED AND MAINTAINED AS PART OF THE
 AUDIT TRAIL FROM ALTERATION OR TAMPERING;
   (C) PROTECT THE INTEGRITY OF HARDWARE FROM  ALTERATION  OR  TAMPERING,
 INCLUDING  BY  LIMITING  ELECTRONIC  AND  PHYSICAL ACCESS PERMISSIONS TO
 HARDWARE AND MAINTAINING LOGS OF PHYSICAL ACCESS TO HARDWARE THAT ALLOWS
 FOR EVENT RECONSTRUCTION;
   (D) LOG SYSTEM EVENTS INCLUDING, AT MINIMUM,  ACCESS  AND  ALTERATIONS
 MADE TO THE AUDIT TRAIL SYSTEMS BY THE SYSTEMS OR BY AN AUTHORIZED USER,
 AND ALL SYSTEM ADMINISTRATOR FUNCTIONS PERFORMED ON THE SYSTEMS; AND
   (E) MAINTAIN RECORDS PRODUCED AS PART OF THE AUDIT TRAIL IN ACCORDANCE
 WITH THE RECORDKEEPING REQUIREMENTS SET FORTH IN THIS ARTICLE.
   (F)  EACH LICENSEE'S CYBER SECURITY PROGRAM SHALL, AT MINIMUM, INCLUDE
 WRITTEN PROCEDURES, GUIDELINES, AND  STANDARDS  REASONABLY  DESIGNED  TO
 ENSURE  THE  SECURITY OF ALL APPLICATIONS UTILIZED BY SUCH LICENSEE. ALL
 SUCH PROCEDURES, GUIDELINES, AND STANDARDS SHALL BE REVIEWED,  ASSESSED,
 AND  UPDATED  BY  SUCH  LICENSEE'S CHIEF INFORMATION SECURITY OFFICER AT
 LEAST ANNUALLY.
   (G) EACH LICENSEE SHALL:
   (1) EMPLOY CYBER SECURITY PERSONNEL ADEQUATE TO MANAGE SUCH LICENSEE'S
 CYBER SECURITY RISKS AND TO PERFORM THE CORE  CYBER  SECURITY  FUNCTIONS
 SPECIFIED IN SUBSECTION (A) OF THIS SECTION;
   (2)  PROVIDE  AND  REQUIRE  CYBER SECURITY PERSONNEL TO ATTEND REGULAR
 CYBER SECURITY UPDATE AND TRAINING SESSIONS; AND
   (3) REQUIRE KEY CYBER SECURITY PERSONNEL TO TAKE STEPS TO STAY ABREAST
 OF CHANGING CYBER SECURITY THREATS AND COUNTERMEASURES.
   § 1016. BUSINESS CONTINUITY AND DISASTER RECOVERY. (A)  EACH  LICENSEE
 SHALL  ESTABLISH AND MAINTAIN A WRITTEN BUSINESS CONTINUITY AND DISASTER
 RECOVERY PLAN REASONABLY DESIGNED TO ENSURE THE AVAILABILITY  AND  FUNC-
 TIONALITY  OF  SUCH  LICENSEE'S SERVICES IN THE EVENT OF AN EMERGENCY OR
 OTHER DISRUPTION TO SUCH LICENSEE'S  NORMAL  BUSINESS  ACTIVITIES.  SUCH
 BUSINESS CONTINUITY AND DISASTER RECOVERY PLAN, AT MINIMUM, SHALL:
   (1)  IDENTIFY  DOCUMENTS, DATA, FACILITIES, INFRASTRUCTURE, PERSONNEL,
 AND COMPETENCIES ESSENTIAL TO THE CONTINUED OPERATIONS OF THE LICENSEE'S
 BUSINESS;
   (2) IDENTIFY THE SUPERVISORY PERSONNEL  RESPONSIBLE  FOR  IMPLEMENTING
 EACH ASPECT OF SUCH BUSINESS CONTINUITY AND DISASTER RECOVERY PLAN;
   (3)  INCLUDE A PLAN TO COMMUNICATE WITH ESSENTIAL PERSONS IN THE EVENT
 OF AN EMERGENCY OR OTHER DISRUPTION TO THE OPERATIONS OF  THE  LICENSEE,
 INCLUDING  EMPLOYEES,  COUNTERPARTIES,  REGULATORY AUTHORITIES, DATA AND
 COMMUNICATION PROVIDERS, DISASTER RECOVERY SPECIALISTS,  AND  ANY  OTHER
 PERSONS  ESSENTIAL  TO  THE  RECOVERY  OF DOCUMENTATION AND DATA AND THE
 RESUMPTION OF OPERATIONS;
   (4) INCLUDE PROCEDURES FOR  THE  MAINTENANCE  OF  BACK-UP  FACILITIES,
 SYSTEMS,  AND  INFRASTRUCTURE  AS WELL AS ALTERNATIVE STAFFING AND OTHER
 RESOURCES TO ENABLE THE TIMELY RECOVERY OF DATA AND DOCUMENTATION AND TO
 RESUME OPERATIONS AS SOON AS REASONABLY POSSIBLE FOLLOWING A  DISRUPTION
 TO NORMAL BUSINESS ACTIVITIES;
   (5)  INCLUDE  PROCEDURES  FOR  THE BACK-UP OR COPYING, WITH SUFFICIENT
 FREQUENCY, OF DOCUMENTS AND DATA ESSENTIAL  TO  THE  OPERATIONS  OF  THE
 LICENSEE AND STORING OF SUCH INFORMATION OFF SITE; AND
 A. 8813                            17
 
   (6)  IDENTIFY  THIRD PARTIES THAT ARE NECESSARY TO THE CONTINUED OPER-
 ATIONS OF THE LICENSEE'S BUSINESS.
   (B)  EACH  LICENSEE SHALL DISTRIBUTE A COPY OF THE BUSINESS CONTINUITY
 AND DISASTER RECOVERY PLAN, AND ANY REVISIONS THERETO, TO  ALL  RELEVANT
 EMPLOYEES  AND  SHALL  MAINTAIN  COPIES  OF  THE BUSINESS CONTINUITY AND
 DISASTER RECOVERY PLAN AT ONE OR MORE ACCESSIBLE OFF-SITE LOCATIONS.
   (C) EACH LICENSEE SHALL PROVIDE RELEVANT  TRAINING  TO  ALL  EMPLOYEES
 RESPONSIBLE FOR IMPLEMENTING THE BUSINESS CONTINUITY AND DISASTER RECOV-
 ERY PLAN REGARDING THEIR ROLES AND RESPONSIBILITIES.
   (D)  EACH  LICENSEE  SHALL  PROMPTLY  NOTIFY THE SUPERINTENDENT OF ANY
 EMERGENCY OR OTHER DISRUPTION TO ITS  OPERATIONS  THAT  MAY  AFFECT  ITS
 ABILITY TO FULFILL REGULATORY OBLIGATIONS OR THAT MAY HAVE A SIGNIFICANT
 ADVERSE EFFECT ON SUCH LICENSEE, ITS COUNTERPARTIES, OR THE MARKET.
   (E) THE BUSINESS CONTINUITY AND DISASTER RECOVERY PLAN SHALL BE TESTED
 AT  LEAST  ANNUALLY  BY  QUALIFIED,  INDEPENDENT INTERNAL PERSONNEL OR A
 QUALIFIED THIRD PARTY, AND REVISED ACCORDINGLY.
   § 1017. ADVERTISING AND MARKETING. (A) NO LICENSEE ENGAGED IN  VIRTUAL
 CURRENCY  BUSINESS  ACTIVITY  SHALL ADVERTISE ITS PRODUCTS, SERVICES, OR
 ACTIVITIES IN NEW YORK STATE OR TO  NEW  YORK  STATE  RESIDENTS  WITHOUT
 INCLUDING THE NAME OF SUCH LICENSEE AND THE LEGEND THAT SUCH LICENSEE IS
 "LICENSED  TO  ENGAGE  IN  VIRTUAL CURRENCY BUSINESS ACTIVITY BY THE NEW
 YORK STATE DEPARTMENT OF FINANCIAL SERVICES".
   (B) EACH LICENSEE SHALL MAINTAIN, FOR EXAMINATION BY  THE  SUPERINTEN-
 DENT,  ALL  ADVERTISING AND MARKETING MATERIALS FOR A PERIOD OF AT LEAST
 SEVEN YEARS FROM THE DATE OF THEIR CREATION, INCLUDING BUT  NOT  LIMITED
 TO PRINT MEDIA, INTERNET MEDIA, INCLUDING WEBSITES, RADIO AND TELEVISION
 ADVERTISING,  ROAD  SHOW  MATERIALS,  PRESENTATIONS, AND BROCHURES. EACH
 LICENSEE SHALL MAINTAIN HARD COPY, WEBSITE CAPTURES OF MATERIAL  CHANGES
 TO  INTERNET  ADVERTISING  AND MARKETING, AND AUDIO AND VIDEO SCRIPTS OF
 ITS ADVERTISING AND MARKETING MATERIALS, AS APPLICABLE.
   (C) IN ALL ADVERTISING AND MARKETING MATERIALS,  EACH  LICENSEE  SHALL
 COMPLY  WITH  ALL  DISCLOSURE REQUIREMENTS UNDER FEDERAL AND STATE LAWS,
 RULES, AND REGULATIONS.
   (D) IN ALL ADVERTISING AND MARKETING MATERIALS, NO  LICENSEE,  AND  NO
 PERSON  OR  ENTITY  ACTING  ON  ITS BEHALF, SHALL, DIRECTLY OR BY IMPLI-
 CATION, MAKE ANY FALSE,  MISLEADING,  OR  DECEPTIVE  REPRESENTATIONS  OR
 OMISSIONS.
   §  1018.  CONSUMER PROTECTION. (A) AS PART OF ESTABLISHING A RELATION-
 SHIP WITH A CUSTOMER, AND PRIOR TO ENTERING INTO AN INITIAL  TRANSACTION
 FOR,  ON  BEHALF OF, OR WITH SUCH CUSTOMER, EACH LICENSEE SHALL DISCLOSE
 IN CLEAR, CONSPICUOUS, AND LEGIBLE WRITING IN THE ENGLISH  LANGUAGE  AND
 IN ANY OTHER PREDOMINANT LANGUAGE SPOKEN BY THE CUSTOMERS OF SUCH LICEN-
 SEE,  ALL  MATERIAL  RISKS  ASSOCIATED  WITH ITS PRODUCTS, SERVICES, AND
 ACTIVITIES AND VIRTUAL CURRENCY GENERALLY, INCLUDING, AT A MINIMUM,  THE
 FOLLOWING:
   (1) VIRTUAL CURRENCY IS NOT LEGAL TENDER, IS NOT BACKED BY THE GOVERN-
 MENT, AND ACCOUNTS AND VALUE BALANCES ARE NOT SUBJECT TO FEDERAL DEPOSIT
 INSURANCE  CORPORATION  OR  SECURITIES  INVESTOR  PROTECTION CORPORATION
 PROTECTIONS;
   (2) LEGISLATIVE AND REGULATORY CHANGES OR ACTIONS AT THE STATE, FEDER-
 AL, OR INTERNATIONAL LEVEL  MAY  ADVERSELY  AFFECT  THE  USE,  TRANSFER,
 EXCHANGE, AND VALUE OF VIRTUAL CURRENCY;
   (3) TRANSACTIONS IN VIRTUAL CURRENCY MAY BE IRREVERSIBLE, AND, ACCORD-
 INGLY,  LOSSES  DUE  TO FRAUDULENT OR ACCIDENTAL TRANSACTIONS MAY NOT BE
 RECOVERABLE;
 A. 8813                            18
 
   (4) SOME VIRTUAL CURRENCY TRANSACTIONS SHALL BE DEEMED TO BE MADE WHEN
 RECORDED ON A PUBLIC LEDGER, WHICH IS NOT NECESSARILY THE DATE  OR  TIME
 THAT THE CUSTOMER INITIATES THE TRANSACTION;
   (5)  THE  VALUE  OF VIRTUAL CURRENCY MAY BE DERIVED FROM THE CONTINUED
 WILLINGNESS OF MARKET PARTICIPANTS TO EXCHANGE FIAT CURRENCY FOR VIRTUAL
 CURRENCY, WHICH MAY RESULT IN THE POTENTIAL FOR PERMANENT AND TOTAL LOSS
 OF VALUE OF A PARTICULAR VIRTUAL CURRENCY SHOULD  THE  MARKET  FOR  SUCH
 VIRTUAL CURRENCY DISAPPEAR;
   (6) THERE IS NO ASSURANCE THAT A PERSON WHO ACCEPTS A VIRTUAL CURRENCY
 AS PAYMENT ON A CERTAIN DATE WILL CONTINUE TO DO SO IN THE FUTURE;
   (7)  THE  VOLATILITY  AND  UNPREDICTABILITY  OF  THE  PRICE OF VIRTUAL
 CURRENCY RELATIVE TO FIAT CURRENCY MAY RESULT IN SIGNIFICANT LOSS OVER A
 SHORT PERIOD OF TIME;
   (8) THE NATURE OF VIRTUAL CURRENCY MAY LEAD TO AN  INCREASED  RISK  OF
 FRAUD OR CYBER ATTACK;
   (9) THE NATURE OF VIRTUAL CURRENCY MEANS THAT ANY TECHNOLOGICAL DIFFI-
 CULTIES  EXPERIENCED  BY THE LICENSEE MAY PREVENT THE ACCESS OR USE OF A
 CUSTOMER'S VIRTUAL CURRENCY; AND
   (10) ANY BOND OR TRUST ACCOUNT MAINTAINED  BY  THE  LICENSEE  FOR  THE
 BENEFIT  OF  ITS  CUSTOMERS  MAY  NOT  BE SUFFICIENT TO COVER ALL LOSSES
 INCURRED BY CUSTOMERS.
   (B) WHEN OPENING AN ACCOUNT FOR A NEW CUSTOMER, AND PRIOR TO  ENTERING
 INTO  AN  INITIAL  TRANSACTION FOR, ON BEHALF OF, OR WITH SUCH CUSTOMER,
 EACH LICENSEE SHALL DISCLOSE IN CLEAR, CONSPICUOUS, AND LEGIBLE  WRITING
 IN  THE ENGLISH LANGUAGE AND IN ANY OTHER PREDOMINANT LANGUAGE SPOKEN BY
 THE CUSTOMERS OF SUCH LICENSEE, ALL RELEVANT TERMS AND CONDITIONS  ASSO-
 CIATED  WITH ITS PRODUCTS, SERVICES, AND ACTIVITIES AND VIRTUAL CURRENCY
 GENERALLY, INCLUDING, AT A MINIMUM, THE FOLLOWING, AS APPLICABLE:
   (1) THE CUSTOMER'S LIABILITY FOR UNAUTHORIZED VIRTUAL CURRENCY  TRANS-
 ACTIONS;
   (2)  THE  CUSTOMER'S  RIGHT TO STOP PAYMENT OF A PREAUTHORIZED VIRTUAL
 CURRENCY TRANSFER AND THE PROCEDURE  TO  INITIATE  SUCH  A  STOP-PAYMENT
 ORDER;
   (3)  UNDER  WHAT  CIRCUMSTANCES  THE  LICENSEE WILL, ABSENT A COURT OR
 GOVERNMENT ORDER, DISCLOSE INFORMATION CONCERNING THE CUSTOMER'S ACCOUNT
 TO THIRD PARTIES;
   (4) THE CUSTOMER'S RIGHT TO RECEIVE PERIODIC  ACCOUNT  STATEMENTS  AND
 VALUATIONS FROM THE LICENSEE;
   (5)  THE CUSTOMER'S RIGHT TO RECEIVE A RECEIPT, TRADE TICKET, OR OTHER
 EVIDENCE OF A TRANSACTION;
   (6) THE CUSTOMER'S RIGHT TO PRIOR NOTICE OF A CHANGE IN THE LICENSEE'S
 RULES OR POLICIES; AND
   (7) SUCH OTHER DISCLOSURES AS ARE CUSTOMARILY GIVEN IN CONNECTION WITH
 THE OPENING OF CUSTOMER ACCOUNTS.
   (C) PRIOR TO EACH TRANSACTION IN VIRTUAL CURRENCY, FOR, ON BEHALF  OF,
 OR  WITH A CUSTOMER, EACH LICENSEE SHALL FURNISH TO EACH SUCH CUSTOMER A
 WRITTEN DISCLOSURE IN CLEAR, CONSPICUOUS, AND  LEGIBLE  WRITING  IN  THE
 ENGLISH  LANGUAGE  AND  IN  ANY OTHER PREDOMINANT LANGUAGE SPOKEN BY THE
 CUSTOMERS OF SUCH LICENSEE, CONTAINING THE TERMS AND CONDITIONS  OF  THE
 TRANSACTION,  WHICH  SHALL INCLUDE, AT A MINIMUM, TO THE EXTENT APPLICA-
 BLE:
   (1) THE AMOUNT OF THE TRANSACTION;
   (2) ANY FEES, EXPENSES, AND CHARGES BORNE BY THE  CUSTOMER,  INCLUDING
 APPLICABLE EXCHANGE RATES;
   (3) THE TYPE AND NATURE OF THE VIRTUAL CURRENCY TRANSACTION;
 A. 8813                            19
 
   (4) A WARNING THAT ONCE EXECUTED THE TRANSACTION MAY NOT BE UNDONE, IF
 APPLICABLE; AND
   (5) SUCH OTHER DISCLOSURES AS ARE CUSTOMARILY GIVEN IN CONNECTION WITH
 A TRANSACTION OF THIS NATURE.
   (D)  EACH  LICENSEE SHALL ENSURE THAT ALL DISCLOSURES REQUIRED IN THIS
 SECTION ARE ACKNOWLEDGED AS RECEIVED BY CUSTOMERS.
   (E) UPON COMPLETION OF ANY TRANSACTION, EACH LICENSEE SHALL PROVIDE TO
 A CUSTOMER A RECEIPT CONTAINING THE FOLLOWING INFORMATION:
   (1) THE NAME AND CONTACT INFORMATION OF  SUCH  LICENSEE,  INCLUDING  A
 TELEPHONE  NUMBER  ESTABLISHED  BY SUCH LICENSEE TO ANSWER QUESTIONS AND
 REGISTER COMPLAINTS;
   (2) THE TYPE, VALUE, DATE, AND PRECISE TIME OF THE TRANSACTION;
   (3) THE FEE CHARGED;
   (4) THE EXCHANGE RATE, IF APPLICABLE;
   (5) A STATEMENT OF THE LIABILITY OF THE LICENSEE FOR  NON-DELIVERY  OR
 DELAYED DELIVERY;
   (6) A STATEMENT OF THE REFUND POLICY OF THE LICENSEE; AND
   (7) ANY ADDITIONAL INFORMATION THE SUPERINTENDENT MAY REQUIRE.
   (F)  EACH  LICENSEE  SHALL  MAKE  AVAILABLE  TO  THE  DEPARTMENT, UPON
 REQUEST, THE FORM OF THE RECEIPTS IT IS REQUIRED TO PROVIDE TO CUSTOMERS
 IN ACCORDANCE WITH SUBSECTION (E) OF THIS SECTION.
   (G) LICENSEES ARE PROHIBITED FROM  ENGAGING  IN  FRAUDULENT  ACTIVITY.
 ADDITIONALLY,  EACH  LICENSEE  SHALL TAKE REASONABLE STEPS TO DETECT AND
 PREVENT FRAUD, INCLUDING BY ESTABLISHING AND MAINTAINING A WRITTEN ANTI-
 FRAUD POLICY. SUCH ANTI-FRAUD POLICY SHALL, AT A MINIMUM, INCLUDE:
   (1) THE IDENTIFICATION AND ASSESSMENT OF FRAUD-RELATED RISK AREAS;
   (2) PROCEDURES AND CONTROLS TO PROTECT AGAINST IDENTIFIED RISKS;
   (3) ALLOCATION OF RESPONSIBILITY FOR MONITORING RISKS; AND
   (4) PROCEDURES FOR THE PERIODIC EVALUATION AND REVISION OF  THE  ANTI-
 FRAUD PROCEDURES, CONTROLS, AND MONITORING MECHANISMS.
   §  1019.  COMPLAINTS.  (A)  EACH LICENSEE SHALL ESTABLISH AND MAINTAIN
 WRITTEN POLICIES AND PROCEDURES TO FAIRLY AND TIMELY RESOLVE COMPLAINTS.
   (B) EACH LICENSEE SHALL PROVIDE, IN A CLEAR AND CONSPICUOUS MANNER, ON
 ITS WEBSITE OR WEBSITES, IN ALL PHYSICAL LOCATIONS,  AND  IN  ANY  OTHER
 LOCATION AS THE SUPERINTENDENT MAY PRESCRIBE, THE FOLLOWING DISCLOSURES:
   (1)  SUCH  LICENSEE'S  MAILING  ADDRESS,  EMAIL ADDRESS, AND TELEPHONE
 NUMBER FOR THE RECEIPT OF COMPLAINTS;
   (2) A STATEMENT THAT THE COMPLAINANT MAY ALSO BRING SUCH COMPLAINANT'S
 COMPLAINT TO THE ATTENTION OF THE DEPARTMENT;
   (3) THE DEPARTMENT'S MAILING ADDRESS, WEBSITE, AND  TELEPHONE  NUMBER;
 AND
   (4) SUCH OTHER INFORMATION AS THE SUPERINTENDENT MAY REQUIRE.
   (C)  EACH  LICENSEE  SHALL  REPORT TO THE SUPERINTENDENT ANY CHANGE IN
 SUCH LICENSEE'S COMPLAINT POLICIES OR PROCEDURES WITHIN SEVEN DAYS.
   § 1020. TRANSITIONAL PERIOD. A PERSON  WHO  WAS  ENGAGING  IN  VIRTUAL
 CURRENCY  BUSINESS  ACTIVITY PRIOR TO THE EFFECTIVE DATE OF THIS ARTICLE
 SHALL APPLY FOR A LICENSE IN ACCORDANCE WITH THIS ARTICLE WITHIN  FORTY-
 FIVE DAYS OF THE EFFECTIVE DATE OF THIS ARTICLE. A PERSON WHO WAS ENGAG-
 ING IN VIRTUAL CURRENCY BUSINESS ACTIVITY PRIOR TO THE EFFECTIVE DATE OF
 THIS  ARTICLE  AND APPLIES FOR A LICENSE WITHIN SUCH FORTY-FIVE DAY TIME
 PERIOD SHALL BE DEEMED IN COMPLIANCE WITH THE LICENSURE REQUIREMENTS  OF
 THIS  ARTICLE  UNTIL SUCH PERSON HAS BEEN NOTIFIED BY THE SUPERINTENDENT
 THAT SUCH PERSON'S APPLICATION FOR  A  LICENSE  HAS  BEEN  DENIED.  UPON
 NOTIFICATION  OF THE DENIAL OF AN APPLICATION FOR A LICENSE, SUCH PERSON
 SHALL IMMEDIATELY CEASE OPERATING IN NEW YORK AND  DOING  BUSINESS  WITH
 NEW  YORK  STATE RESIDENTS. ANY PERSON ENGAGED IN VIRTUAL CURRENCY BUSI-
 A. 8813                            20
 
 NESS ACTIVITY THAT FAILS TO SUBMIT AN APPLICATION FOR A  LICENSE  WITHIN
 FORTY-FIVE DAYS OF THE EFFECTIVE DATE OF THIS ARTICLE SHALL BE DEEMED TO
 BE CONDUCTING UNLICENSED VIRTUAL CURRENCY BUSINESS ACTIVITY.
   § 1021. SEVERABILITY. IF ANY PROVISION OF THIS ARTICLE OR THE APPLICA-
 TION  THEREOF  TO  ANY  PERSON  OR CIRCUMSTANCE IS ADJUDGED INVALID BY A
 COURT OF COMPETENT JURISDICTION,  SUCH  JUDGMENT  SHALL  NOT  AFFECT  OR
 IMPAIR  THE  VALIDITY  OF  THE  OTHER  PROVISIONS OF THIS ARTICLE OR THE
 APPLICATION THEREOF TO OTHER PERSONS OR CIRCUMSTANCES.
   § 2. This act shall take effect on the one hundred eightieth day after
 it shall have become a law. Effective immediately, the addition,  amend-
 ment and/or repeal of any rule or regulation necessary for the implemen-
 tation  of  this act on its effective date are authorized to be made and
 completed on or before such effective date.