N.Y. Regulator Moving Ahead on Bitcoin Regulation

New York’s financial regulator recently revealed new details on his agency’s plans to govern virtual currency firms in the state in order to protect consumers and combat money laundering.

Benjamin Lawsky, superintendent of New York’s Department of Financial Services, expects to adopt enhanced consumer disclosure rules, capital requirements and a framework for permissible investments with consumer money.

Lawsky has said he plans to issue a “BitLicense” for businesses that use the new currencies, and he intends to provide regulations this year, which could make New York the first U.S. state to regulate virtual currencies such as bitcoins.

In a speech in Washington on Feb. 11, Lawsky said consumers need to know that virtual currency transactions are generally irreversible. Lawsky said more challenging questions include what capital requirements firms must have on balance sheets to absorb unexpected losses, and how many risks they can take with investments using consumer money. One issue is whether the firms should be allowed to invest in virtual currencies. Lawsky added that he is grappling with what types of firms and transactions to regulate.