Last updated on June 4th, 2015 at 12:46 am
New York Superintendent of Financial Services Benjamin Lawsky, who will be leaving the post at the end of June, released the final version of the BitLicense, the set of rules that will regulate cryptocurrency-related businesses in the state of New York.
Lawsky presented the BitLicense during a speech delivered at the BITS Emerging Payments Forum, in Washington.
The BitLicense, which many Bitcoiners and experts consider to be castrating and based on outdated laws, requires any businesses dealing with Bitcoin and other virtual currencies to apply for a specially tailored DFS license. The companies will then have to follow a number of specific conditions – regarding anti-money laundering compliance and digital security, for instance – to keep the license up to date.
During his speech, the Superintendent admitted that the existing money-transmission laws are outdated and cannot be properly applied to cryptocurrency, a technology “unlike anything we had ever seen before.” Which means that this first set of laws must be seen a first attempt to regulate virtual currencies and not a perfect final product.
It took the department two long years of work to come up with the current version of the BitLicense, which should now become a template that will inspire other states and financial regulators. Lawsky believes the regulation will “help protect consumers and root out illicit activity,” without blocking the evolution of “promising new technologies before they get out of the cradle.”
According to the New York Superintendent of Financial Services, quoted by The Wall Street Journal, the BitLicense won’t require approval for standard software updates, as only material changes to technology are covered by the law. Also, the set of rules will only cover intermediaries with custody of customer funds, not software developers.
Companies that apply to a BitLicense won’t have to apply to a traditional money-transmitter license, as the process is valid for both documents. Also, the applicants won’t have to file SARs (Suspicious Activity Reports) when requesting a new crypto-license, as long as these anti-money-laundering actions have previously been handled by FinCEN (US Treasury Department’s Financial Crimes Enforcement Network).
The document also states that changes related to investment will only require approval when an investor gains control over the business.
However, the Department of Financial Services’ new regulation is definitely not a crowd pleaser. One of the biggest obstacles the BitLicense had to overcome was the strong opposition of the Bitcoin community and cryptocurrency-related business owners. Now that the document has been approved and its final version is live, the only thing left to do is wait and hope that the law allows Bitcoin businesses to keep growing.