Benjamin Lawskydevelopers, miners and individuals will generally not be affected by the upcoming BitLicense in New York, according to Benjamin Lawsky, head of the New York Department of Financial Affairs (NYDFS).
In a speech at the Benjamin N Cardozo School of Law in New York, Lawsky clarified that many individuals and companies operating in the state of New York in the Bitcoin world do not require regulatory approval or a “BitLicense” (Bitcoin license).
We regulate the Bitcoin secret, Lawsky said
“To be clear, we do not aim to regulate software, scam or software development. For example, if a software developer develops a wallet and makes it available to people for private use, no Bitcoin secret is required. Those who are innovative and develop new platforms for digital currencies will not need BitLicense.”
However, Lawsky pointed out that companies or people who manage customers’ money will not be exempt from it: “We will not allow someone in their garage to run a bank.”
We don’t regulate cryptosoft development
Banks and technologies collide as seen in the review about cryptosoft. Lawsky believes that the banking sector and the technology industry are slowly “colliding”, posing new regulatory cryptosoft challenges.
The NYDFS worked out the regulations for sending money when there was neither the Internet nor digital currencies. However, the department is still responsible for regulating such companies today.
A positive hint, by the way. Lawsky said that the NYDFS quickly realized the great potential of the blockchain: “When we started to take a closer look at Bitcoin, we could immediately see the power of the technology behind Bitcoin. The technology has the potential to drastically reduce remittance fees, Lawsky says.
New Yorkers usually pay 8-9% for overseas transfers, but with Bitcoin these fees could be reduced to just 1%, Lawsky stressed. In addition, with digital currencies no one has to disclose their credit card details and transactions take place within minutes, he added.
Lawsky explains the provisions
After the fall of the Bitcoin exchange Mt. Gox, the NYDFS has started to develop the first draft of the BitLicense.
The comment period for the original draft was extended at the request of leading members of the Bitcoin industry. The comments have been taken into account in the revised version. There will be another comment period after the release of the new version.
Lawsky also made it clear that the NYDFS will never require companies to provide more than one digital currency license, and in most cases no money sender license will be required. Just like the developers, no individuals will be affected by the BitLicense.
Lawsky also addressed some of the criticisms of the first draft and said that it was clearly some misunderstanding. One point of criticism was, for example, that banks would not have to comply with the new regulatory framework, but that would only be the case if they did not work with digital currencies, Lawsky said.
Benefits of regulation
Lawsky also said something about the attitude towards Bitcoin mining:
“Mining will not be regulated per se. However, if a miner becomes active in other areas such as hosting wallets or on file-sharing sites, a BitLicense for these activities may become due. No license will be required for the mining itself.”
In order to allow new startups to flourish, the NYDFS will also try to keep compliance costs as low as possible.
In his speech, Lawsky also admitted that companies can decide for themselves whether to work with companies from unregulated countries to circumvent regulation. This, Lawsky said, would ultimately allow the company to sacrifice competitiveness.