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New York Regulators Extend BitLicense Comment Period

The New York Department of Financial Services (NYDFS) has extended the comment period for its BitLicense proposal by an additional 45 days, following numerous complaints about the lack of time available to study the proposal.

“There has been a significant amount of public interest in and commentary on DFS' proposed regulatory framework for virtual currency firms. A number of groups and individuals have also requested additional time to study the proposal given that it is the first of its kind and could potentially serve as a model for other jurisdictions,” says the NYDFS in a statement.

Although Bitcoin market participants have largely welcomed the legitimacy that a BitLicense would confer on the industry, the proposed rules have received criticism from some market participants.

Jeremy Allaire, CEO of Bitcoin consumer finance company, Circle, argues that the current proposals could radically limit the number of people who can participate in the Bitcoin industry, pushing firms towards offshore and unregulated entities.

He warns that, unless the BitLicense proposal is amended, Circle will have “no choice” but to block its New York customers from accessing its services.

“Today, as a template for other state, federal or international rule-making, it [the BitLicense proposals] would be devastating for the industry,” notes Allaire. “Clarifying the scope of business activity covered by the BitLicense to exclude software creators and mining operators, taking a risk-based or tiered approach to financial institution’s that are licensed, reducing the burden of business approval and reporting, and normalising the AML requirements with Federal expectations would go a long way to improving the BitLicense.”

Jim Harper, global policy counsel for the Bitcoin Foundation, says that he’s “confident that the NYDFS will improve on the draft that it issued last month”.

Meanwhile, the US Consumer Financial Protection Bureau (CFPB) has issued an advisory that warns consumers about the risks of virtual currencies such as Bitcoin.

In the paper, the CFPB advises consumers to be aware of potential issues with virtual currencies such as unclear costs, volatile exchange rates, the threat of hacking and scams, and that companies may not offer help or refunds for lost or stolen funds.

The CFPB also announced that consumers who encounter a problem with a virtual currency product or service can now submit a complaint with the bureau. “Virtual currencies may have potential benefits, but consumers need to be cautious and they need to be asking the right questions,” says CFPB director, Richard Cordray. “Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market.”

galen@profit-loss.com

Profit & Loss

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