New York Reveals Bitcoin License Rules
- By Matt Holden
- Jul 18, 2014
Benjamin Lawsky, leader of the New York Department of Financial Services, has legitimized virtual currency, such as Bitcoin, by revealing a set of draft rules for “BitLicenses.”
As part of the new rules, Bitcoin trading businesses must pass background checks, know all their customers, be open to regulator inspection at any time and keep 100% of account reserves on hands.
“We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity – without stifling beneficial innovation,” 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.”
These rules don’t apply to users who spend this money on things like food and expendables, instead they are requirements on bank businesses that buy, sell and store bitcoins. The rules serve as an attempt to eliminate black market uses, such as money laundering, for Bitcoin.
This makes it hard for anyone hoping to acquire a BitLicense, as financial regulators will carefully screen anyone running a virtual currency business. Regulators will check their criminal background, professional qualifications and judge whether they’re fit to manage money.
Matt Holden is an Associate Content Editor for 1105 Media, Inc. He received his MFA and BA in journalism from Ball State University in Muncie, Indiana. He currently writes and edits for Occupational Health & Safety magazine, and Security Today.