Benjamin Lawsky, the NY state’s top financial regulator, has recently announced steps to help NY startups enter the digital currency space without troublesome regulations meant for larger, well-established companies. The revised regulations do not apply to large corporations.
“The revised regulation will offer a two-year transitional BitLicense, which may be issued to those firms who are unable to satisfy all of the requirements of a full license,” was written in the notes of the speech Lawsky had given the Bipartisan Policy Center in Washington, D.C.” And will be tailored to startups and small businesses.”
As said by Lawsky, the revised regulations will exclude many of the aspects that rivals had criticized for being strict, including the types of companies that would be subject to the rules.
There is no doubt that startups will be required to face “robust standards” for customer protection and anti-money laundering requirements. However, what is important is that there will be an exclusion aimed at encouraging angel investors being involved in the digital currency space. Lawsky has emphasized that the digital currency rules are intended to inspire customer confidence and promote commerce.
“Licensees may apply to the Department for a determination that certain specific parties should not be deemed to be control parties by the Department. If they are truly not involved in the day-to-day or major management decisions of the company,” according to the notes. “Virtual currencies really sit at that crossroads of the much more lightly regulated tech sector and the more heavily regulated financial sector.”
According to Lawsky, digital currency miners, people buying the currency as a personal investment, and merchants who accept digital currency as a form of payment for goods and services will not be required to be compliant.
“We are regulating financial intermediaries. We are not regulating software development,” Lawsky stated. “Additionally, customer loyalty programs, rewards, and gift cards denominated in fiat currency will not fall under the BitLicense.”
Lawsky said that the Department of Financial Services would release the revised regulations “in the coming days,” afterwards the public will have 30 days to submit comments. He added that he hoped to conclude the rules by in the beginning of the next year.
Jim Harper, a senior fellow at the Cato Institute who has studied digital currency issues, commented on the situation to the Washington Post: “I’m sure that the new draft is better than the old draft. The remaining question is going to be whether it’s good or not. … The thing to look at is, will it create consumer confidence more than it undercuts innovation??”