Benjamin Lawsky, superintendent of the New York Department Financial Services (NYDFS) says that developers, miners and individuals using Bitcoin will generally not be regulated by the impending ‘BitLicense’ proposals. His statement came when he was speaking at the Benjamin N Cardozo School of Law, New York.
Lawsky clarified that many individuals and companies working within the Bitcoin space will not need regulatory approval or a BitLicense to operate in New York State as the organization will be regulating financial intermediaries not the others. He says that they are not regulating software development professionals or companies.
He further elaborated and clarified that NYDFS does not intend to regulate software or software development. For example, a software developer who creates and provides wallet software to customers for their own use will not need a license. Those who are innovating and developing the latest platforms for digital currencies will not need a license.
However, he made it clear that the companies that are involved in safeguarding customers’ money will not be exempt. He said that for instance, someone who runs a bank out of their garage will be regulated. He cited various benefits from regulations of the Bitcoin intermediaries like banks or exchanges.
Lawsky believes that mining per say will not be regulated. He makes clear that to the extent the miner engages in other virtual currency activities they won’t be regulated; however, if they are hosting wallets or exchanging virtual currency, a license may be required for those activities. He clears that for mining itself there will be no license requirement.
NYDFS Will Try to Keep Compliance Cost Down
Going ahead putting his thoughts on Bitcoin regulation, Benjamin Lawsky said that the NYDFS will also try to keep compliance costs down as it will allow startups to thrive. He says that some companies may choose to operate from unregulated jurisdictions to avoid the state’s regulatory requirements.
However, he warned that if the companies chose to do so, such companies may end up sacrificing competitiveness. Lawsky says that his hope is that companies recognize, or at least some of them do, that appropriate, effective regulation will help create a race, not to the bottom, but to the top.
He thinks that it will foster greater confidence and trust from both customers and investors who want to do businesses committed to customer protection. That will spur a cycle of greater adoption of virtual currencies.
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