New York’s top banking regulator says he plans to relax pending rules set to govern Bitcoin and other virtual currencies. The more startup-friendly requirements come after criticism that the state has moved too quickly to regulate the new technology.
Futurists see virtual currencies as revolutionizing the financial industry the same way the Internet has revolutionized nearly everything.
New York was the first jurisdiction to introduce rules on Bitcoin. Regulators hope to mark the path for other jurisdictions to follow.
New York's regulations were designed to protect consumers and halt money laundering. But after the rules were announced in July several influential Bitcoin startups said they would not do business with New York consumers.
In a speech Tuesday at Cardozo Law School, New York’s Superintendent of the Department of Financial Services, Ben Lawksy, said he would make “substantive changes” to the pending regulations.
Lawsky is considering two possible mechanisms for making it easier for new companies to enter the field. The first would have tiers of regulation for start ups in virtual currency.
“Businesses under a million, under five million, under 10 million, for those business you would maybe have those requirements [be] less onerous, especially those kind of requirements that cost a lot of money.”
Lawksy mentioned another possible mechanism for softening the hand of regulation that would allow new companies a grace period where they could exist without significant oversight.
Bitcoin investors and executives who observed Lawsky’s comments had mixed reaction. Some said any regulation will send companies abroad where they say their innovation would be less constrained. Others said it would be impossible for major virtual currency companies to not do business in New York.
Lawsky plans to reissue the revised rules later this year.
