Wheels in Motion for Digital Currency Regulation in N.Y. (March 13, 2014)
The New York State Department of Financial Services (NYDFS) has begun accepting applications from firms looking to set up digital currency exchanges and will issue proposed regulations on digital currency in the coming months, the agency said.
A public order issued this week by NYDFS Superintendent Benjamin Lawsky said the department would “consider proposals and applications in connection with the establishment of [digital] currency exchanges located in the State of New York.” The order comes in the wake of hearings the NYDFS held in late January as part of its ongoing investigation into the regulation and possible licensing of digital currency businesses, as well as the failure of popular Bitcoin exchange Website Mt. Gox, which resulted in hundreds of millions of dollars in losses. “The recent problems at Mt. Gox and other firms further demonstrate the urgent need for stronger oversight of [digital] currency exchanges, including robust standards for consumer protection, cyber security and anti-money laundering compliance,” said Lawsky.
With the public order now issued, firms can begin immediately submitting proposals and applications, which represents the formal commencement of a regulatory process, according to the NYDFS. Approved applications will be required to follow the regulatory framework currently being drawn up by the agency and set to be formally proposed by the end of the second quarter.