New York State Department of Financial Services Announces Bitcoin Hearings

(@southtopia) | Published on January 11, 2014 at 09:42 BST

The New York State Department of Financial Services (NYDFS) will hold public hearings on the regulation of digital currencies on 28th and 29th January in New York City.

It will also discuss potentially issuing something it calls “BitLicenses” as a regulatory requirement specific to businesses in the “virtual” currency field.

Financial Services Superintendent Benjamin M. Lawsky issued a notice yesterday inviting members of the press and public to attend the hearings, which will include witnesses presenting before an inquiry as well as panel discussions.

The notice warned that space would be limited, and promised “a broad cross-section of industry participants, investors, academics and other individuals involved in the virtual currency industry.”

As the United States’ predominant financial services and trading hub, New York State is bound to receive high-profile attention and set the tone for future discussions with whatever findings it reaches.

The NYDFS first raised the idea of public hearings and BitLicenses in November, around the same time the US Senate Committee was holding its own hearings. Since then there has been a marked shift in US authorities’ opinions on digital currency – from initial disdain and joking to genuine curiosity.

Bitcoin’s price has leapt from around $400 the week of the hearings to something nearer $1,000, drawing in larger players and putting huge amounts of money at stake. If public statements around the world are any guide, central banks have also been rattled.

“Our public hearing will review the interconnection between money transmission regulations and virtual currencies. Additionally, the hearing is also expected to consider the possibility and feasibility of NYDFS issuing a ‘BitLicense’ specific to virtual currency transactions and activities, which would include anti-money laundering and consumer protection requirements for licensed entities,” the November statement said.

The outcome of the Senate hearings was seen as positive for digital currencies and bitcoin in particular. Senator Jerry Moran turned to Reddit to hear users’ opinions, saying:

“Thanks everyone. I appreciate your comments. This thread will be a valuable resource as I continue to educate myself about bitcoin and digital currency.”

Prominent members of the bitcoin and digital currency community testified as witnesses, steering the discussion away from the usual crime-and-security cliches and back towards the potential for financial innovation. Stand-out witnesses included BitPay CEO Tony Gallippi and the Bitcoin Foundation’s general counsel Patrick Murck.

Over-regulation, including a requirement for many digital currency businesses to register as money transmitters separately in all 50 states, is seen as a barrier to entrepreneurship in the US and many of the world’s largest bitcoin businesses are located elsewhere.

The NYDFS’s statement in November, however, still listed several examples of bitcoin-related criminal activity before mentioning potential positives. While accepting some form of regulation as potentially inevitable, the digital currency community will again have its collective fingers crossed for further level-headed, conversation-setting testimonies.

US Law image via Shutterstock

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