Last updated on October 13th, 2017 at 10:51 pm
Since the beginning of the year, the New York Department of Financial Services (NYDFS) has been moving ahead on instituting so-called BitLicenses, a regulatory measure that would force businesses working with bitcoins and other virtual currencies to file for licenses.
The NYDFS is now taking a step further that could hurt bitcoin companies in the Empire State. The top financial regulator unveiled a new plan Thursday that would also require companies to maintain certain levels of capital, install compliance officers and obtain special licenses.
If passed, New York would become the first state in the country to implement such rigorous regulations for the peer-to-peer decentralized digital currency industry, a move that has come with mixed reactions. These regulations would apply to any business that buys, sells, exchanges, transmits or stores.
“My hope is that the companies that can meet these rules will give consumers a lot of confidence when they do business with these companies, and that will help those companies thrive and succeed,” said Benjamin Lawsky, superintendent of the department, in an interview with the Wall Street Journal.
The purpose of this initiative is to hinder money laundering schemes and help investors from becoming victims of unscrupulous exchanges, websites and bitcoin entrepreneurs. As of now, there will be a 45-day public comment period.
CoinDesk spoke with a number of digital currency industry leaders, such as Charles Cascarilla, CEO of bitcoin exchange itBit, who said that he isn’t necessarily surprised by the news and that his company will abide by all of the compliance regulations.
“[These] guidelines are actually helpful as they outline exactly what needs to be implemented by a bitcoin company to operate,” said Casacrilla.
Jaron Lukasiewicz, CEO of bitcoin trading exchange Coinsetter, believes it’ll help the industry overall.
“As a New York City-based company, the BitLicense is an important asset that will allow us to provide US banking and regulatory protection to our target customer group. I’m happy to see the New York DFS making tangible progress towards offering the first achievable regulatory bitcoin license in the country.”
Critics of the regulations say it’ll make it a lot more difficult for bitcoin startups who have finite resources and want to expand bitcoin. Opponents also say that these new regulations will only be benefiting legal professionals and compliance officers. Roger Ver, a so-called bitcoin Jesus, thinks it’ll inevitably drive bitcoin businesses out of New York entirely.
“These men calling themselves government are not asking anybody to do anything. They are making demands, and will put us behind bars if we don’t obey,” Ver told Wired magazine. “Bitcoin was specifically designed to strip away power from men who would be so presumptuous to believe that they have the right to rule over others.”
Max Keiser, a financial journalist and commentator, tweeted Ver’s sentiment in the sense that it will prompt bitcoin entrepreneurs to other countries like Isle of Man, which is developing into a bitcoin safe haven.
New York’s BTC BitLicense scheme seems like it will empower regions like Isle of Man to dominate Bitcoin, IMO.
— Max Keiser (@maxkeiser) July 17, 2014
New York’s latest regulatory developments come as the governments of Argentina and France have imposed new identity verifications for bitcoin users. We reported this week that these authorities have mandated financial institutions to attain this information otherwise they will be prohibited from doing business with these firms.