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Screenshot of a breaking news alert e-mail from Q2 2017
Outgoing Superintendent of Financial Services of New York State Benjamin M. Lawsky this week announced the release of the New York State Department of Financial Services’ (NYDFS) final BitLicense – the first comprehensive framework for regulating digital currency firms.
The BitLicense – which is the product of a nearly two-year-long NYDFS inquiry – contains key consumer protection, anti-money laundering compliance, and cyber security rules tailored for digital currency companies. A copy of the final BitLicense regulation is available here.
Superintendent Lawsky also delivered remarks this week at the BITS Emerging Payments Forum in Washington, DC regarding the final BitLicense rules and payments regulation – some highlighted quotes of which can be found below:
The fact that we found ourselves working on an issue as unexpected as digital currency speaks to the extraordinarily dynamic nature of the financial markets and financial technology right now. The pace of change is only going to accelerate in the years to come. And regulators need to be ready to meet that challenge.
The emergence of digital currency and other new forms of payments technology represent an important test for financial regulators such as NYDFS. We have a responsibility to regulate new financial products in order to help protect consumers and root out illicit activity. That is the bread and butter job of a financial regulator.
Ultimately, we think regulation is important to the long-term health of the virtual currency industry. Building trust and confidence among consumers is crucial for wider adoption. It also helps attract additional investment.
Digital currency companies have already sought to work with us to put in place consumer and anti-money laundering protections. In fact, one firm recently received a New York State charter to operate under the banking law. And we expect additional companies will follow in the weeks and months to come – whether under the banking law or through the BitLicense.
This is a critical and exciting time in the broader evolution of the payments system. Virtual currency is a novel field for regulators and everyone – including our office – must be willing to take a hard look at how these new rules are working when they are put into practice.
We have never claimed to have a monopoly on the truth. And regulators must always be willing to course correct when necessary. However, it is our hope that digital currency and other innovations in payments technology – together with prudent regulation – will help deliver better service and lower costs to customers over the long term.
As we have noted in previous contexts, I think it would shock most consumers to learn that – at its core, despite modest improvements – our bank payments has changed little since it was created four decades ago in the 1970s. And it generally takes you longer to transfer money electronically than it would to physically transport that cash to another state or country.
In a world where information travels around the globe in a matter of milliseconds, it can often take several days to transfer money to a friend’s bank account. In an age of smart phones and on-demand technology, we still have a disco-era payments system. That needs to change and we are starting to see real efforts at improvements. We need to recognize that our children and their children will not hesitate to bank and live their entire financial lives online. And in the online world, people expect near-instantaneous execution.
To see the full speech transcript, click here.
Coinsetter, a leading Wall Street quality global bitcoin exchange founded in 2012 has had a keen eye on any regulation concerning digital currency brokers, platforms and exchanges. Coinsetter’s New York-based bitcoin exchange offers margin trading for businesses, the most established APIs for professional traders, high uptime, low latency trade execution, enterprise bitcoin security by Securicoin®, deep liquidity and attractive pricing.
Thus, in reaction to this week’s news, NYC-based Coinsetter CEO Jaron Lukasiewicz stated the following:
“As a New York City-based exchange, we have awaited regulatory clarity from New York that enables us to offer better deposit and withdrawal methods to customers. Most execs in the industry still feel that the final BitLicense rules are fairly ambiguous, but I hope the DFS will work with the industry to help it grow.
My use of the word “hope” highlights an issue we see with financial regulation today. There is an extreme lack of clarity from our perspective as an innovating company in terms of what will be required of us to obtain a license in any state. Coinsetter will submit an application to the NYDFS that we believe merits licensure. We will also continue pushing to offer innovative products that help enhance personal freedom and create low cost ways for the underbanked to transfer money.
Our company has verbalized an understanding of working alongside regulation for many years now. Now that the BitLicense is approaching, I hope that the NYDFS and other state regulators will help support fast innovation in financial technology startups through extreme flexibility and low cost burden.”
Stay tuned to LeapRate for all relevant news concerning bitcoin, digital currency, and regulation of such block-chain & cryptocurrency technology as it looks to play a disruptive role within the FX community. Will regulators and the digital trading and payment industry strike the right balance in the years ahead to unleash the true power of this financial technology?