State may regulate Bitcoin, other virtual currencies

Mock Bitcoins are displayed on a table in an illustration picture taken in Berlin January 7, 2014. Credit: Reuters
Virtual currency firms may soon have to be licensed to operate in New York state. Credit: Reuters

New York will propose regulating virtual currency firms that operate in the state this year and may require them to obtain a “BitLicense,” banking regulator Benjamin Lawsky said on Tuesday.

The regulations would be aimed at preventing misconduct such as money laundering without derailing a fledgling technology, said Lawsky, the state’s superintendent of Financial Services.

Lawsky was speaking at the start of two days of hearings on online currencies organized by his agency, the New York Department of Financial Services.

The digital currency Bitcoin, while gaining wider acceptance by businesses such as the Sacramento Kings basketball team and e-commerce site Overstock.com, has been coming under increased scrutiny by regulators. Bitcoin is not backed by a government or central bank; its value fluctuates according to user demand.

The hearings in New York came the day after U.S. prosecutors charged a Bitcoin exchange executive, Charlie Shrem, with conspiring to commit money laundering.



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