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NYDFS’s Benjamin Lawsky Says Digital Currency BitLicenses are Coming

February 12, 2014         By: Kevin Xu

Following last month’s Virtual Currency Hearing, which played host to big names in the digital currency world including investors and regulators, the general sentiment among the NYDFS participants was that of finagling current existing laws to protect participants on all sides.

Investors and representatives from current digital currency service providers are had asked for clearer regulatory requirements and soon, New York may be the first state to clearly outline these requirements.

New York Department of Financial Services’ superintendent, Benjamin Lawsky wants to adapt current money transmitter regulations to grant “BitLicenses” to businesses dealing in digital currencies, and they will most likely come as soon as this year.

Though the exact details of these digital currency specific rules are not currently clear, Lawsky did say in a statement to a bitcoin forum in Washington D.C. yesterday, “We do not have to throw out all of our existing rules for money transmitters or banks, which have generally served consumers well when vigorously enforced.”

Investors during the Virtual Currency Hearings urged that if regulation were to be placed on bitcoin and the like, then these regulations should not be draconian or else it would stifle innovation since startups generally cannot afford the costs of compliance.

The focus will most likely be on digital currency exchanges to uphold “know-your-customer” safeguards to prevent money laundering and illicit activities.

Whatever BitLicense specific regulation is coming, will come soon, and will likely be built on the already existing money transmitter rules that banks and other entities must abide by.

Lawsky’s full comments can be seen here.