N.Y. Proposes Rules for Digital Currency Businesses (July 22, 2014)
New York State’s Department of Financial Services is seeking public comment on a recently proposed “BitLicense” regulatory framework for digital currency businesses in the state. The rules are part of a nearly year-long inquiry into decentralized currencies, such as Bitcoin, and address consumer protection, AML compliance and cyber security. The proposed rules will be published in the New York State Register tomorrow, beginning a 45-day public comment period.
The BitLicenses, according to the DFS, would be required for companies receiving or transmitting digital currency on behalf of consumers; securing, storing or maintaining custody or control of digital currency on the behalf of customers; performing retail conversion services, including converting or exchanging fiat currency or other value into digital currency and vice versa, or converting or exchanging one digital currency to another; buying and selling digital currency as a customer business; or controlling, administering or issuing a digital currency.
The license is not required for merchants or consumers using digital currency for the purchase or sale of goods or services; or those firms chartered under the New York Banking Law to conduct exchange services and approved by DFS to engage in digital currency business activity, according to the announcement.
Look for a deeper dive on DFS’s proposed “BitLicense” rules in an upcoming Paybefore Viewpoint by Judith Rinearson, partner at Bryan Cave LLP and contributing editor at Paybefore.
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