Lawsky bows to BitLicense backlash

Lawsky bows to BitLicense backlash

Individual users, software developers and bitcoin miners will be exempt from new regulations being drawn up to regulate the crypto-currency markets by New York's State Department of Financial Services.

The clarification of the rules was confirmed by NYSDFS superintendent Benjamin Lawsky, who has faced a backlash in libertarian circles over his controversial BitLicense proposals.

Speaking at the Benjamin N. Cardozo School of Law in New York City, Lawsky said: "To be clear, our proposal was meant as a beginning - not an end - to a healthy, vigorous public discussion about what the final regulation should look like."

In his first public comments on the developing regulatory framework so far, Lawsky admitted: "We will likely make certain changes to our initial proposal - and clarify other provisions. We want to move quickly to put in place rules of the road for virtual currency firms to provide greater clarity and certainty about the regulatory environment. But not move so quickly that we risk mistakes."

In his speech, Lawsky said that software developers, bitcoin miners, and individuals doing business in New York state won't have to apply for a BitLicense, although traditional banks looking to get into digital currencies will.

"The banks we regulate cannot start providing virtual currency services without prior approval from DFS, and they will be have to comply with any requirements that are otherwise imposed on virtual currency businesses," he said.

In response to complaints about the costs of compliance on a fledgeling industry, Lawsky said that the Department was searching for a creative solution so that startups could abide by the rules but not get crushed by over-regulation.

"We are not seeking to stifle technological innovation, " said Lawsky. "But if a software company is also taking on the responsibility of actually safeguarding customer money - it is a much more difficult calculation.

"Again, that is the basic bargain of financial services regulation. We do not, for instance, let someone run a bank out of their garage. And licensure and regulation often helps foster greater trust among consumers."

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