The New York Department of Financial Services recently announced that it will be holding hearings in the coming months to discuss regulating Bitcoin. Earlier, this year in August the DFS had subpoenaed several Bitcoin companies and important persons as it wanted information about their business practices so that it can think of the ways to regulate the virtual currency.
In his statement, Benjamin Lawsky, New York’s financial sheriff said that he wanted to wrap his head around the virtual currencies for he wants to figure out what regulation was necessary to promote legitimate commercial uses. He also aims to regulate Bitcoin so that it cannot be used for drugs, guns, money laundering and child porn.
Soaring prices of Bitcoin is prompting the authority to mull a plan to regulate it for better use. Bitcoin has soared above $400 and may go up to $500 by the end of the year despite the fact that it faced a major jolt when Silk Road was sized for doing contraband activities like selling drugs and arms in exchange of Bitcoin.
Benjamin Lawsky announced that he is planning to hold a hearing so that any possibility and feasibility of NYDFS issuing a ‘BitLicense’ is chalked out.
What is BitLicense?
BitLicense is meant for those who wish to do business in New York and send currency to New Yorkers. To get it the companies would need to comply with anti-money laundering and consumer protection requirements/laws; however, these will be tweaked to meet the specific requirement for digital currency.
Benjamin Lawsky admits and hopes he will be able to work specifically tailored examination requirements for digital currencies and not just Bitcoin. Thus, a potential BitLicense could apply to firms involved with all virtual currencies and would not be limited to Bitcoin, the existing leader in the segment.
NYDFS in its statement says that it is not clear at this point whether virtual currencies will become long-term, prevalent fixtures of the electronic commerce world. Thus, it sounds from the language it has used that the agency is still skeptical about the role of virtual currencies like Bitcoin.
The the same agency says that the increased demand from consumers and investors, as well as demonstrated concerns regarding money laundering, regulators would be remiss if they turned a blind eye to virtual currencies. Therefore, it has a responsibility to take a hard look at these issues.
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