New York Department of Financial Services Weights “BitLicenses” for Bitcoins

You may remember New York issuing subpoenas to more than 20 companies involved with bitcoin in August of this year. Financial regulators wanted to scope out bitcoin and the state of digital currencies.

Benjamin Lawsky, New York’s Superintendent of Financial Services, plans to hold a hearing to gauge the possibility of the NYDFS issuing so called “bitlicenses.”

Bitcoin has gotten a bad rap for the types of transactions that it may enable such as money laundering, drugs and weapons purchases, and illicit services.

These licenses would essentially require any company that deals in virtual currencies that wish to conduct business in New York to comply with AML and consumer protection laws.

Despite bitcoin’s meteoric rise in the last few months (at the time of writing one bitcoin is ~$450) these regulations would be absolutely welcome to those who have been affected by swindlers and scam artists.

Just this month alone, there have been various reports of bitcoin exchanges and wallets being shuttered due to regulatory pressure, or worse, as cut-and-run-take-all-your-bitcoins scams.

Of course, there are costs to being compliant, and businesses with the wherewithal can simply just move elsewhere.

On the other hand, if bitlicenses become a method of certification of security and carrying out consumer-friendly business practices, then it can be an excellent first step in establishing bitcoin as a viable commodity and method of global transactions, through acceptance rather than abhorrence.