Lawsky Comments on Update to NY Bitlicense Regulation

In comments on October 14, 2014, Ben Lawsky commented on changes to the proposed bitlicense regulations. The main points he made were these:

  • Regarding who will be required to obtain a bitlicense, he said the focus will be financial intermediaries, not software developers or individual users.
  • To the extent that company may need both money transmitter and virtual currency licenses, for example – which is possible – the process will be streamlined to avoid duplication.
  • Regarding concerns that banks were exempted, he said that is untrue. Banks cannot start providing virtual currency services without prior approval from DFS, and they will have to comply with any requirements that are otherwise imposed on virtual currency businesses.
  • Mining, per se, will not be regulated. To the extent a miner engages in other virtual currency services, however – for example, hosting wallets or exchanging virtual currency – a license may be required for those activities.
  • Consideration is being given to how to avoid excessive regulatory costs for startups – but no specific proposal was provided. He said the goal is not to stifle technological innovation, but if a software company is also taking on the responsibility of actually safeguarding customer money, it is a much more difficult calculation.