Ben Lawsky Announces Revised BitLicense

A few days ago, New York State’s superintendent of financial services, Ben Lawsky, announced DFS’s revised outline of the Bitlicense framework for regulating digital currencies. The updated Bitlicense will be posted on FDS’s official website for a new 30 day round of public comments soon.

Lawsky outlined a few changes made to the previous license version and the reasoning underlying each of them. The changes were aimed at providing more flexibility for digital currency start-ups to seize an opportunity to innovate, while at the same time protecting public consumers against fraud and routing out money laundering. The changes were formulated in view of the comments the FDS received to the BitLicense regulatory framework proposal published earlier this year.

According to Lawsky, the BitLicense will not regulate software developers, such as businesses creating wallet software for customers, as it is only meant to regulate financial intermediaries. Also, gift cards, customer loyalty programs and rewards will not fall under the BitLicense; some commentators falsely believed that the license will regulate such activities as shown in the most recent comment period.

Miners and personal investors will not be required to obtain a BitLicense and merchants who accept crypto currencies as a payment form will not also have to acquire a BitLicense.

Start-ups were among the areas that received much attention during the public commenting process. Lawsky announced that the revised framework will offer a 2 year transitional BitLicense which will be issued for  businesses that are unable to satisfy all the requirements of the full license. The transitional license will be tailored up to fit small businesses and start-ups, while at the same time protecting consumers against fraud and elicit activities. The transitional license is crucial to protect investments in the space.

The revised license has shortened the proposed bookkeeping requirement period for licenses from 10 to 7 years. It also eliminated the requirement that licensees are required to obtain the addresses and transaction data for all parties involved in a transaction and according to the revised BitLicense, they are only required to obtain that data for their own customers and/or account holders.

The full revised Bitlicense will be posted during the upcoming days and shortly after, a new commenting period will be kicked off and a final regulatory framework will be formulated accordingly early in 2015.

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