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New York’s superintendent of Financial Services Benjamin Lawsky has revealed plans to introduce a less onerous ‘transitional’ BitLicense for bitcoin startups.
New York’s Department of Financial Services (NYDFS) considers creating Transitional BitLicense, a special type of bitcoin license which would allow certain small businesses and start-ups function within a more flexible framework.
That was announced by Benjamin Lawsky, the department’s Superintendent, at the Money 20/20 conference in Las Vegas on Sunday night. The 5-day conference featured other key personalities of the industry, such as Nicolas Cary, CEO of Blockchain, Jeremy Allaire, CEO of Circle, Twins Winklevoss and others.
Money2020 is one of the largest payments conferences in the world and focuses on the intersection of payments and financial services. Since its inception in 2012 the event has experienced considerable growth.
The 2014 event is expected to feature over 7,000 attendees, 700 CEOs, and 2,500 companies, representing the broad spectrum of industries redefining the entire commerce ecosystem.
According to Ben Lawsky, speaking at the conference, he has listened to concerns from start-ups worried that they do not have the resources to meet the forthcoming New York State Department of Financial Services BitLicense requirements.
Companies would be able to apply for a transitional version of the license that will let them function within a more “flexible framework” for a set time. While deciding whether to grant this, the regulator will look at factors such as the volumes a company deals with, consumer risk it presents, and whether it has risk-mitigating things such as insurance in place.
Ben Lawsky said that he is planning to set up an enthusiastic team within the NYSDFS to deal with virtual currency startups applying for the licenses. Besides, he stated that software developers, individual users, and bitcoin miners will not be subject to the regulations.
The BitLicense ideas are still in the drafting stage. A new version will be presented in early December. Afterwards a 30-day consultation period will take place before the final document will be published early next year.
The BitLicense rules will contain tougher cyber-security requirements than traditional financial institutions face. Lawsky stated that this will serve as a model for more strict forthcoming regulations for banks.
Benjamin Lawsky was considerably positive about the advantages of virtual currencies including cheaper and more frictionless transactions, and urged bitcoin companies to come to New York and work within the system, rather than escaping to the darkest corners of the world.