New York's proposed Bitcoin rules include consumer protections

The state would require virtual currency traders to monitor transactions for money laundering

Companies trading in Bitcoin and other virtual currencies would be required to hold enough of the currencies to cover their debts to customers and would have to verify the identities of account holders as a protection against money laundering, under new regulations proposed by the New York State Department of Financial Services [DFS].

The proposed rules, announced Thursday, would also require virtual currency traders to develop customer complaint procedures, to adopt cybersecurity policies and to submit to examinations by the DFS in exchange for a so-called BitLicense to trade in virtual currencies.

DFS has conducted an 11-month inquiry into Bitcoin regulation, with the department's interest starting just months after trading problems surfaced at Mt. Gox, a large Japanese Bitcoin-trading service. Law enforcement officials have also raised concerns that the anonymity of Bitcoin owners could open the door to easier money-laundering schemes.

"We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity -- without stifling beneficial innovation," DFS Superintendent Benjamin Lawsky said in a statement. "Setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets."

New York would be the first state to issue virtual currency regulations. DFS plans to publish the proposed regulations next Wednesday. Their publication will start a 45-day public comment period. DFS will also publish the proposed rules on Reddit, the content-sharing site with a large community of virtual currency users.

New York would require BitLicenses for businesses that receive or transmit virtual currency on behalf of consumers, or store or control virtual currency for customers. DFS would also require a license for businesses that convert virtual currencies to other currency, or that buy or sell virtual currency as a business model.

The licenses will not be required for merchants or consumers that receive virtual currencies as payment for goods or services, DFS said.

Under the proposed rules, DFS would require virtual currency licensees to provide detailed receipts to customers, and would require them to monitor transactions for money laundering and report suspected activity to the department.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags governmentregulationinternetfinanceindustry verticalsInternet-based applications and servicesBenjamin LawskyNew York State Department of Financial Services

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?