Superintendent of Financial Services, Benjamin M. Lawsky, has announced the New York State Department of Financial Services’ (NYDFS) BitLicense. In a speech about the new Bitlicense framework Lawsky said that in 2011 he did not expect digital currencies to be at the top of his list, "Looking back, that was a bit of a surprise.".
Lawsky feels that digital currencies are a new test for financial regulators and that is is their responsibility: "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.".
The challenge is getting the balance right, and banning the new phenomena is impossible: "How exactly does someone go about banning computer code?"
In the speech some interesting points are made about regulators seemingly being slow to respond to technological developments: "In many ways – I think it is fair to say – right now it often feels like regulators are from Mars and technologists are from Venus.". Also it is pointed out that regulating these new developments is in it's infancy.
About BitLicense itself, it has been greatly influenced by feedback given by the public. Some highlights:
- Companies will not need prior approval for standard software or app updates, only for material changes to their products or business models. "We have no interest in micro-managing minor app updates. We’re not Apple."
- There is no intention of being a regulator of software developers – only financial intermediaries.
- Duplication is avoided where possible, no duplicate application will be required for BitLicense and money transfer licences. Also suspicious activity reporting ("SARs") processes will not require duplication.
- Companies also will not need prior approval from NYDFS for every new round of venture capital funding. As long as the investor does not wants to direct the policies and management of the firm.
More detail is in the speech which is pretty good reading.