N.Y. Regulator Proposes Bitcoin ‘Lite’ License
The bitcoin world was abuzz this week after New York’s top financial regulator announced a proposal to create a licensing process that might make it easier for small digital currency startups to enter the market.
During a speech at the Money20/20 conference Tuesday in Las Vegas, New York Superintendent of Financial Services Benjamin Lawsky said his office might establish two levels of licenses to regulate the digital currency industry, according to national media reports.
In addition to a specialized BitLicense for more established businesses, New York might offer a transitional BitLicense with lighter regulatory requirements for start-up companies, Lawsky said.
It’s been about a year since he introduced the concept of a BitLicense.
Lawsky’s latest announcement comes on the heels of intense criticism regarding New York’s first draft of the specialized BitLicense, released in July which critics said would stifle innovation.
The NYDFS is expected to publish another draft of the BitLicense in December, followed by a 30-day comment period, Lawsky said.
In addition to his Money20/20 keynote, Lawsky shared insights about the proposed new licenses during a recent speech at a New York law school, according to the NYDFS website.
“We want to move quickly to put in place rules of the road for virtual currency firms to provide greater clarity and certainty about the regulatory environment,” Lawsky said during the law school speech. “But not move so quickly that we risk mistakes.”
Lawsky said there has to be a way for start-ups to start up and play by the rules without getting crushed by huge compliance costs.
“This goes back to that original collision between traditional banking and tech innovation. It requires a creative solution and we are working on that issue,” he explained.
In part, this concern is also why the NYDFS wants to make the revised regulation quite clear that software companies do not need a BitLicense in order to develop new software and innovate, Lawsky said.
“We are not seeking 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.”
The credit union industry has kept a close eye on the bitcoin world, especially following last year’s seizure of a $2.9 million Dwolla account owned by a Bitcoin pioneer and held at the $2.4 billion Veridian Credit Union in Waterloo, Iowa.
During the past year, some credit unions and banks have reportedly refused to open Bitcoin business accounts, according to media reports.