Superintendent of the New York Department of Financial Services Ben Lawsky revealed a draft proposal on Thursday of regulations governing virtual currencies like Bitcoin, making New York the first state in the country to grapple directly and openly with the issue. If passed, they would be the first regulations on virtual currencies anywhere in North America to carry the full weight of the law.
The rules say that anyone conducting "virtual currency business activity" needs to have a BitLicense. That sort of activity includes things like buying and selling virtual currency as a customer business, storing virtual currency on behalf of others, or issuing a virtual currency. Merchants and customers who use virtual currencies exclusively for the transactions of goods and services, however, are exempt.
If you want to start a virtual currency exchange or operate an online wallet service in the state of New York, you're going to need a BitLicense, but if you just want to buy or sell a pizza with virtual money, it's still possible to do so without first getting government approval.
Applying for a BitLicense involves disclosing personal and financial information for top company officials, undergoing a background check, paying a fee, and providing details about the structure and business goals of the company. If the regulators see any shady behavior, licenses can be either suspended or revoked entirely following a hearing.
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