Bitcoin Companies React to NYDFS Regulation Proposal

By Eric CalouroJuly 17, 2014 18:47

Bitcoin Companies React to NYDFS Regulation Proposal

Story Highlights

  • Companies react to NYDFS regulation proposals
  • Comments came from Coinsetter, BitPay, and itBit

Hot on the heels of the release of the proposed bitcoin regulation announced by the New York State Department of Financial Services (which was done so on Reddit.com by DFS Superintendent Benjamin Lawsky), comes the public statements of several bitcoin companies.

BitPay Chief Compliance Officer Tim Byun said that ” It is commendable that NY DFS and Ben Lawsky are supporting innovation while ensuring balanced regulations,” adding that the framework released offers a “Strong understanding of the bitcoin ecosystem, including valuable services to consumers that would benefit from an emerging, efficient and cheaper payment system.”

Byun noted that the proposal also provided a “Strong understanding of Anti-Money Laundering/Anti-Terrorist Financing and T Trade Sanction obligations, including existing Virtual Currency regulations and exemptions at the Federal level,” and “Ability to leverage the Bank Secrecy Act and the significant resources that are already expended by the bitcoin ecosystem to comply with anti-money laundering and anti-terrorist financing requirements.”

The Atlanta, Georgia-based company said that “BitPay wants to ensure consumers and merchants have access to innovation, and the true potential for an efficient, cheaper, faster payment system,” but seeks clarity on several items outlined by the NYDFS.

The items (quoted):

  • VC Transaction Reporting – especially purchases over $10K per day could represent an unlevel playing field as purchases via credit or debit cards over $10K are not reported

  • Identification for Large Transactions – whether transactions represent purchases of goods and services. This rule may be reasonable for exchanging of BTCs with fiat currencies and vice versa, at VC custodians; however, it may be unnecessary for purchases of goods and services similar to commerce today.

  • Cyber Security Program – having sound security controls is paramount; however, the requirements of annual penetration test and others may inhibit further innovation, as smaller ecosystem entrants would face significant costs. The framework may benefit from a more risk based program or establishing nominal thresholds that would enable innovation while ensuring controls or transparency to protect consumers

Meanwhile, New York-based exchange itBit stated that the guidelines are “right in line with what itBit has always advocated.”

The company’s CEO, Charles Cascarilla, said:

We applaud the thoughtful and transparent approach that Benjamin Lawsky and the NY DFS have taken in examining consumer protection issues surrounding virtual currency and related businesses. We believe this framework is important for the ecosystem to operate in a compliant and trustworthy way, and shows the DFS’ ongoing dedication to improving the stability of the industry […] We take every possible measure to ensure that itBit protects consumers, prevents abuse and provides security. The proposed BitLicense aligns with our current standards and practices, and we have every intention to be in compliance with the final guidelines.

Coinsetter CEO Jaron Lukasiewicz offered the following comment to NEWSBTC on Thursday afternoon:

“I am excited to see the New York DFS’s proposal for the BitLicense come out for public comment. We will be working to understand the requirements it proposes so that we can be prepared to submit an application later this year.”

More and more companies are expected to come forth with their statements over the next couple of weeks. There is a forty-five day public commenting period, after which the NYDFS will consider comments and possibly make appropriate amendments.

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