On March 11, the New York Department of Financial Services (the DFS) issued a public order stating that it will begin considering proposals and applications to establish virtual currency exchanges located in New York. DFS Superintendent Benjamin M. Lawsky stated, “The recent problems at Mt. Gox and other firms further demonstrate the urgent need for stronger oversight of virtual currency exchanges, including robust standards for consumer protection, cyber security, and anti-money laundering compliance.”
The submission of proposals and applications will begin the regulatory process, and applicants will work with the DFS to ensure that their applications include robust protections with respect to consumers, cyber security and anti-money laundering. Approved applications will be subject to the regulatory framework that the DFS expects to put forth by the end of the second quarter of 2014. Among the proposed regulations will be a “BitLicense” for virtual currency firms in New York. The DFS also plans to consider proposals and applications for virtual currency firms other than exchanges in the near future. Superintendent Lawsky stated, “Consumers should understand and receive appropriate disclosures about the potential risks associated with using virtual currencies or any other financial product, but the fact is that virtual currencies are unlikely to disappear entirely.”
The DFS announcement regarding the public order is available here.
The DFS public order is available here.