If it is now accepted at dozens of major retailers and if New York State’s financial regulator is going to spend months figuring out the best way to regulate it, then it is fair to say that that Bitcoin is here to stay.
The chief financial regulator of New York State, Benjamin M. Lawsky, outlined revisions to the state’s highly anticipated “BitLicense” proposal on Thursday.
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Lawsky said the Department of Financial Services planned to publish the revised rules in the coming days after which the public will have 30 days to make comments. He noted the regulations were scheduled to be finalized early next year.
New York’s original BitLicense plan was the first attempt by a state to regulate virtual currency firms. The proposal included rules on consumer protection, capital requirements, the prevention of money laundering and cybersecurity. It also noted that the rules would apply to Bitcoin exchanges and companies that secure, store or maintain custody or control of the virtual currency on behalf of customers
No license for bitcoin mining
Many in the Bitcoin industry objected to language in the proposal left the door open for the government to regulate firms that were not directly involved with digital currency.
In replying to these objections, Lawsky said the new rules made it clear that software developers and Bitcoin miners would not be required to apply for operating licenses. By the same token, customer loyalty programs, rewards and gift cards denominated in the fiat currency would also not be subject to BitLicense rules.
Representative of start-ups and small businesses were worried about the cost of compliance with the regulations, and noted that high costs would discourage young companies.
Statement from Benjamin Lawsky
Lawsky highlighted that the revised regulations will offer a two-year transitional BitLicense for companies that “are unable to satisfy all of the requirements of a full license.” Such transitional licenses are meant for start-ups and small businesses, he pointed out.
“That transitional BitLicense will help provide start-ups an on-ramp as they build up their operations,” Lawsky continued.
“Virtual currencies such as Bitcoin are a very, very long way from being a credible challenger to banks or the existing payments system,” Lawsky noted. “But I think virtual currency could eventually cause some amount of self-reflection in the legacy financial system.”