DFS making good progress on virtual currency regs. Sorry for running slightly behind. Should have proposal out in next week or 2. #bitcoin
— Ben Lawsky (@BenLawsky) July 9, 2014
The NYDFS rules are widely seen as the first test of meaningful regulation of the bitcoin industry in the U.S. Lawsky has said that his agency’s primary focus with the regulations is to “squelch money laundering first,” and that he is taking pains to prevent “stifling innovation.” As such, the regulations are expected to be similar to those banks and other financial institutions currently observe.
The cornerstone of the NYDFS rules is the proposed “BitLicense,” which enables institutions to legally conduct business in bitcoin. The license would be the first of its kind, and the first state-level approval of bitcoin as a currency-like instrument. With Wall Street expected to be a hotbed of bitcoin activity in the second half of this year, the licenses will be required before any major investments are possible.
Once the regulations are drafted, the proposal would still need to approved. According to the Wall Street Journal’s coverage earlier this year, that process involves an open comment period of 60-90 days. Assuming that timeline is accurate, the first BitLicenses could be issued in time for Q4 investment.