New York State Unveils Proposal to Regulate Bitcoin Companies

Bitcoin-specific regulation is one step closer to a reality in New York.

The state’s Department of Financial Services today released a detailed proposal for “BitLicenses” — licenses that companies engaging in the buying, selling, storing or exchanging of virtual currencies will have to apply for if they want to conduct business in the state. The proposal makes New York the first state to issue proposed rules created specifically for virtual currency companies.

Under the proposal, businesses would be required to keep records of the identities and physical addresses of their users; monitor transactions for possible illegal activity and report them if fraud is suspected; and at all times have in its possession the amount of bitcoin that is owed to its customers. Here’s the full list of BitLicense rules.

In an interview with Re/code in March, the state’s superintendent of financial services, Ben Lawsky, said such a proposal would be aimed at making New York a safe and welcoming home for bitcoin companies and consumers.

“We want to be open to the new, new thing and new financial products and new fintech developments as much as possible,” he said at the time, “but without sacrificing the protections we need for consumers and to protect against money laundering.”

Businesses that simply accept virtual currencies such as bitcoin as a payment instrument for goods and services would not need to apply for a license.

The public will have 45 days from next Wednesday to comment on the proposal.

This article originally appeared on Recode.net.

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