New York state explores feasibility of 'BitLicenses' for virtual currency firms

New York state explores feasibility of 'BitLicenses' for virtual currency firms

The New York State Department of Financial Services (NYDFS) is exploring the feasibility of creating a new brand of money transmission license for virtual currencies, dubbed BitLicenses.

The Department says it plans to hold a public hearing on virtual currency regulation in New York City in "the coming months at a time and location to be determined".

In August, NYDFS signalled its intent to get a grip on the nascent market when it subpoenaed 22 bitcoin-related companies requesting information about the way in which they operate.

In Thursday's statement, the agency says: "Virtual currencies may have a number of legitimate commercial purposes, including the facilitation of financial transactions. That said, NYDFS also believes that it is in the long-term interest of the virtual currency industry to put in place appropriate guardrails that protect consumers, root out illegal activity, and safeguard our national security."

The upcoming hearing will debate the use of new regulatory guidelines tailored specifically to the unique characteristics of virtual currencies. In particular, it is 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.

"Given the increased demand from consumers and investors, as well as demonstrated concerns regarding money laundering, regulators would be remiss if they turned a blind eye to virtual currencies," states the NYDFS. "We have a responsibility to take a hard look at these issues."

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