After two years of debates and revisions, the New York Department of Financial Services (NYDFS) today released BitLicense, the world’s most awaited Bitcoin regulatory framework that many experts believe could be a prototype for other state regulators.
Mr. Benjamin Lawsky, the soon-to-be former Superintendent of NYDFS, dictated the law during a speech in Washington DC. The new rules, as said by the regulator, were focused on businesses which hold customers’ funds, and also those which offers digital currency to fiat exchange services. As per the speech, these kind of firms are told to obtain a special DFS license, and are further asked to keep their license up to date with regards to the laws related to consumer protection, anti-money laundering, change of ownership, and amongst others.
BitLicense meanwhile brought some optimistic amendments for the technology-centered businesses, ensuring a space for innovation that most of the earlier critics questioned. Lawsky acknowledged Bitcoin as a never-seen-before technology which cannot be caged into the traditional money-transmission laws. He therefore excused tech firms from obtaining permissions when it comes to introducing software updates and organizing capital funding rounds.
Lawsky further excused students and innovators from obtaining the Bitcoin license, until and unless they become a financial intermediary. “There is a basic bargain that when a financial company is entrusted with safeguarding customer funds and receives a license from the state to do so – it accepts the need for heightened regulatory scrutiny to help ensure that a consumer’s money does not just disappear into a black hole,” he added.
Lawsky meanwhile also excused the Bitcoin companies from submitting Suspicious Activity Reports (SAR) to NYDFS, saying that such information can also be obtained by the federal regulators.
“Our goal is to avoid duplication where possible,” he said. “And we generally already have access to that information when we need it through information sharing arrangements with federal regulators.”
The BitLicense comes at a time when Wall Street is already showing immense interests in experiment with the digital currency technology. In last few months, America’s leading stock exchanges Nasdaq and NYSE has joined the Bitcoin club, while the investments into the sector has also surged impressively from last year.