Follow Us

We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message

New York's proposed Bitcoin rules include consumer protections

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

Article comments

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.



Share:

More from Techworld

More relevant IT news

Comments



Send to a friend

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

Techworld White Papers

Choose – and Choose Wisely – the Right MSP for Your SMB

End users need a technology partner that provides transparency, enables productivity, delivers...

Download Whitepaper

10 Effective Habits of Indispensable IT Departments

It’s no secret that responsibilities are growing while budgets continue to shrink. Download this...

Download Whitepaper

Gartner Magic Quadrant for Enterprise Information Archiving

Enterprise information archiving is contributing to organisational needs for e-discovery and...

Download Whitepaper

Advancing the state of virtualised backups

Dell Software’s vRanger is a veteran of the virtualisation specific backup market. It was the...

Download Whitepaper

Techworld UK - Technology - Business

Innovation, productivity, agility and profit

Watch this on demand webinar which explores IT innovation, managed print services and business agility.

Techworld Mobile Site

Access Techworld's content on the move

Get the latest news, product reviews and downloads on your mobile device with Techworld's mobile site.

Find out more...

From Wow to How : Making mobile and cloud work for you

On demand Biztech Briefing - Learn how to effectively deliver mobile work styles and cloud services together.

Watch now...

Site Map

* *