Benjamin Lawsky, Superintendent of the New York State Department of Financial Services (NYDFS), announced Tuesday evening several changes he will make to the proposed special banking license – known as BitLicense – that his department introduced in July to regulate digital currencies, report several news outlets.
Lawsky outlined the revisions in prepared opening remarks for a panel discussion on digital currencies and regulations at Yeshiva University’s Benjamin N. Cardozo School of Law in New York City.
The first proposal by a US state to develop guidelines on digital currencies, BitLicense includes proposed rules on consumer protection, cybersecurity, and money-laundering prevention.
MoneyBeat, a Wall Street Journal blog, reports that Bitcoin miners, software developers, and individuals (unless they also provide financial services) who conduct business in New York state will not have to apply for a BitLicense, said Lawsky. However, traditional banks considering getting into digital currency will have to apply.
“The banks we regulate cannot start providing virtual currency services without prior approval from DFS (Department of Financial Services), and they will be have to comply with any requirements that are otherwise imposed on virtual currency businesses,” said Lawsky, as reported by Reuters.
“The virtual currency industry is at a bit of a crossroads regarding whether it will become an important part of the future financial system,” he said, according to MoneyBeat. “At DFS, we’re committed to proceeding thoughtfully since virtual currency could ultimately have a number of benefits for our financial system.”
InsideBitcoins reports that Lawsky noted some benefits of digital currencies, such as efficient global transfers, as well as some downsides, including the collapse of the Mt. Gox exchange. “It’s impossible to eliminate all of the risks but effective regulation can minimize consumer risk,” Lawsky said.
The current comment period on BitLicense is slated to end soon, and Lawksy said his department will issue an amended version of the proposal, which will be made available for public feedback, reports MoneyBeat.
“To be clear, our proposal was meant to be a beginning, not an end,” said Lawsky, as reported by InsideBitcoins. “We are going to likely make changes to our proposal and we’ll see a new comment period. That is quite typical. We can make our proposal better, smarter and wiser. We will be making substantive revisions, but many of the original rules makes sense.”
Many of the amendments Lawsky expects to announce will be “clarifying in nature.” Further modifications, as reported by InsideBitcoins, include possible “cumulative and duplicative” money transmitter registration and digital currency licensing required for some companies, but the process will be streamlined.
Lawsky said the DFS is aware of complaints regarding the cost of compliance, especially on how it will impact startups, reports MoneyBeat. “This is a difficult issue,” he said. “It requires a creative solution and we are working on that issue.” But such costs, whether for a startup or a multinational organization, are ultimately a cost of the financial services industry, says MoneyBeat.
InsideBitcoins reports that Lawsky said it was not the DFS’s intent to issue “regulations for regulations sake. Just applicable guardrails so that consumers are protected.”