The news is finally out that all the companies dealing in virtual currency will now have to operate under the purview of BitLicense if they want to practice in New York State. If the regulation system works well, this regulation would be implemented across other states as well.
Ben Lawsky, New York DFS head unravel the rules just weeks before he plans to leave his current role to begin private practice. He released on Wednesday what we know as BitLicense that are a set of rules that the Bitcoin companies will have to obtain and as well as retain to operate in New York.
DFS has been regulating several top brand names in the financial sector such as Goldman Sachs, Barclays and MetLife. While heading DFS, Lawsky made it a point that he gets some regulation for virtual currencies that have been notorious for promoting illegal cyber transactions and other high level drug deals.
A 44 Page Document to Define Bitcoin
This document is a lengthy 44 page regulation that defines final details of operating in Bitcoin domain including details like $5000 application fee mandatory for the license. The document will also give clearly what the license entails. According to BitLicence, without the permit, no one is allowed to conduct virtual currency business in New York State.
High Barriers to Entry
The companies that want to procure this license would be required to have a compliance officer who can check that the company meets all the legal requirements with regards to bitlicense rules in order to apply for the license. The company should also conform with other state and federal laws that are applicable to virtual currencies. They would need to comply with money transmitter laws and all other such laws that can become an expensive affair for the start-ups.
Under the controversial radar
Lawsky’s bitlicense has raised a lot of censure from the community who claim that such regulations can inhibit creativity and increase costs unreasonably. They also say that these expensive regulations will give large financial institutions a monetary edge over small start-ups when it comes to growing the bitcoin.
However, Lawsky insists that his rule book is fair for both the operators and the users who have been discouraged to use bitcoin due to lack of regulatory framework.
Lawsky says that the balance was hard to achieve but it was also the key to build strong companies based on new technologies. It is these regulations that will help them become better financial companies.
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