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New York State considers licensing Bitcoin traders

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bitcoin 1020 (casascius)
bitcoin 1020 (casascius)

On Friday, the New York State Department of Financial Services announced it will be holding a public hearing on virtual currency regulation, specifically considering whether a certification called "BitLicense" might help manage the spread of online currencies like Bitcoin. The new license would require consumer protection services, as well as anti-money laundering requirements, designed to make the currency less useful in cases of fraud and criminal activity.

The announcement emphasized that no decision has been made on the license, but the idea has raised crucial questions among both Bitcoin fans and Bitcoin skeptics. Thus far, Bitcoin exchanges have mostly evaded the money transmission regulations that banks and other currency exchanges are required to uphold, and many worry that the introduction of those regulations might make the currency less appealing, causing its value to decline. But for regulators, it's a necessary step towards bringing Bitcoin into the mainstream and avoiding large-scale fraud within the community, like the million-dollar TradeFortress heist that occurred earlier this month. As the Department of Finance put it, "it is in the long-term interest of the virtual currency industry to put in place appropriate guardrails that protect consumers, root out illegal activity, and safeguard our national security."