Developers, miners and individuals using bitcoin will generally not be regulated by the impending ‘BitLicense’ proposals, according to Benjamin Lawsky, superintendent of the New York Department Financial Services (NYDFS).
Speaking at the Benjamin N Cardozo School of Law, New York, Lawsky clarified that many individuals and companies working within the bitcoin space will not need regulatory approval or a BitLicense to operate in New York State.
“We are regulating financial intermediaries. We are not regulating software development,” he said, adding:
“To clarify, we do not intend to regulate software or software development. For example, a software developer who creates and provides wallet software to customers for their own use will not need a license. Those who are innovating and developing the latest platforms for digital currencies will not need a license.”However, Lawsky stressed that companies involved in safeguarding customers’ money will not be exempt. “We do not, for example, let someone run a bank out of their garage,” he said.
Banking and tech ‘collide’
According to Lawsky, the banking industry and the tech industry are starting to “collide” and create new challenges for regulators.The NYDFS was forced to operated with money transmitter regulations drafted at a time when there was no Internet or cryptocurrencies, he said, explaining that the department has an obligation to license and regulate such companies.
On a positive note, Lawsky said the NYDFS quickly recognised the potential of block-chain technology:
“As we began looking at bitcoin last year and getting deeper into it, we began to see the power of the technology that underlies it.”The technology has the potential to provide cheaper fees and remittances, he said.
New York residents who send money abroad usually pay fees of 8-9%, while digital currencies could operate with fees of about 1%, Lawsky pointed out. Digital currencies do not require people to disclose their credit card information and offer faster transactions, he added.
Lawsky clarifies provisions
The NYDFS started working on the first controversial BitLicense drafts following the fall of Mt Gox, earlier this year, said Lawsky.The comment period for the original proposal was extended following requests from industry leaders. The revised proposal will take those comments into account and, once published, a new comment period for the revised regulation will begin.
