Benjamin Lawsky worthily marked his forthcoming resignation from the post of superintendent of the New York State Department of Financial Services. Final version of BitLicense has been just released. New regulations apply to New York now but hopefully will spread to other states.
Digital currencies and bitcoin in particular is a complicated notion. It wasn’t easy to develop a set of regulations that will control the sphere while still leaving space for innovations. Lawsky shared the idea he kept to: “Getting that balance right is hard, but it is key. We want to promote and support companies that use new, emerging technologies to build better financial companies. We just need to make sure that we put appropriate regulatory guardrails in place”.
It took Lawsky four years to come to a final third version. BitLicense was presented at a financial industry conference in Washington on Wednesday. Many bitcoin entrepreneurs have been dissatisfies with “too strict regulations” Lawsky used to offer. He responds saying that making mistakes in the beginning of new way is quite natural: “Setting the exact contours of the new rules of the road in these areas is extraordinarily difficult. Regulators are not always going to get the balance precisely right. Much like some startups – there are going to be some false starts. But we need to begin somewhere”.
The rules have been developed specially for companies storing customers’ funds. They do not apply to bitcoin software developers.
Lawsky singled out the main theses:
- Companies will not need prior approval to carry out software or app updates.
- The regulator will not be regulating software developers — only the financial intermediaries. If you are not holding funds, you don’t need a licence.
- BitLicense applications won’t need their own special application — they can be applied for at the same time as the more common money transmitter license.
- Companies will not have to send duplicate reports of “suspicious activity” just because something happens with Bitcoins — digital and non-digital currency will be treated the same
- Bitcoin companies will not need prior approval from the DFS when raising venture capital, unless the investor is planning to direct management or policy changes.
Bitcoin has been succeeding on mainstream market in recent years. It gained support of investors and enthusiasts. Nevertheless conservative financiers got never tired of underlying volatile nature of cryptocurrencies and absence of official regulations in the sphere. Now 44-page document provides desired control and makes the sphere more reliable.
Lawsky votes for necessary changes in existing financial system saying that it’s high time to revolutionize it. He is pleased with the possibilities digital currencies will have in five or ten years. Hopefully newly-developed regulations will only benefit the industry.