N.Y. to License and Regulate Bitcoin Exchanges
March 17, 2014
The Bitcoin fervor, created by the spectacular failure of Bitcoin exchange Mt. Gox, has abated but New York stepped up to remind the Bitcoin community of the uphill battle it faces in terms of increased government scrutiny. The state’s Department of Financial Services (NYDFS) said last week it will license virtual currency exchanges based in New York. To obtain a license to operate a Bitcoin exchange, companies will have to submit formal applications and proposals to NYDFS and abide by regulations the agency said will be proposed publicly before July 1, 2014.
“The recent problems at Mt. Gox and other firms further demonstrate the urgent need for stronger oversight of virtual currency exchanges, including robust standards for consumer protection, cyber security, and anti-money laundering compliance,” said Benjamin M. Lawsky, superintendent of Financial Services. “Virtual currencies are unlikely to disappear entirely. They will likely continue to exist in one form or another. As such, turning a blind eye and failing to put in place guardrails for virtual currency firms while consumers use that product is simply not a tenable strategy for regulators.”