Lawsky and the NYDFS released the final version of the Bitlicense today. While bitcoin community members have been internet fighting over regulation, the bottom line is that it was coming one way or another, deal with it. If individual companies feel that the current framework is too restrictive, Lawsky stated that the NYDFS would be willing to re-visit the license and amend it as necessary.
Taking a look through the license, there are a few things that we feel are important to point out.
This is great news for anyone worried about their exchange running a fractional reserve, trading with customer funds, etc. What it also appears to mean, is that US based exchanges can soon begin running a BFX style swap system.
This aligns with FinCEN’s previous statement, which can be found here. While one day we hope that bitcoin will be recognized as legal tender, the regulators aren’t there just yet.
Currency vs. Virtual Currency
FinCEN’s regulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.”3 In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.
What we find to be the most important piece of the new Bitlicense is something that most will overlook. In the 2014 version (here), there was a part at the bottom of page 14 that caught our attention.
Sneaky, sneaky… so once hyperbitcoinization sets in, and no one wants that dirty fiat, the original plan was to use the trash cash to continue supporting the ponzi.
This is NOT in the new Bitlicense, and we thank you for that Lawsky. Overall, this is an extremely exciting day for Bitcoin. Although not all welcome regulation, the proposed framework does not seem too restrictive business wise. Anyone with $5,000 per application (to pay for your background check and associated fees) is now free to send in their fingerprints and completed forms to the NYDFS to review.