What do you think Lawsky's latest comments means for the market?
Ben Lawsky announced the latest revisions to the draft BitLicense today in Washington, DC, announcing a host of changes in response to reactions from its public comment period.
The New York State Department of Financial Services (NYDFS) superintendent made the announcement this morning in a keynote speech delivered at a panel event hosted by think tank Bipartisan Policy Center, where he spoke about the regulatory landscape around bitcoin and other payment technologies.
Lawsky first clarified which players in the digital currency community and industry would be required to obtain the BitLicense, specifying that the NYDFS intends to regulate only financial intermediaries.
Software developers, miners and those who issue loyalty and rewards schemes and gift cards denominated in fiat currency will not be required to obtain a BitLicense – nor will sole individuals who buy and hold virtual currency for personal investment, virtual currency-accepting merchants or their customers.
Lawsky also announced that the NYDFS has shortened the proposed record-keeping requirement for licensees from 10 to seven years, and eliminated a requirement that licensees must obtain addresses and transaction data for all parties in a transaction.
Licensees now only need to obtain that information "for their own customers or account holders" and, to the extent possible, for "counterparties to the transaction", according to the superintendent.
Lastly, the updates allow for a more broad range of financial assets that includes virtual currency that can be counted towards licensees' capital requirements.
Unleashing innovation
The changes address and clarify the many concerns submitted by the bitcoin community around the degree of regulation proposed potentially being too restrictive for innovation to thrive.
However, Lawsky presented a bullish position on digital currency's place in the US payments system and the need for banks and regulators to adapt to and encourage NextGen payments in a digital world.
"Virtual currency could eventually cause some amount of self-reflection in the legacy financial system," he said. "If banks continue to torpedo even modest updates to the payment system, they ultimately do run at least some risk of facing the Blockbuster Video problem."
He added:
"At a certain point, enough is enough – and four decades of slow-to-non-existent progress in the bank payments system seems like fair warning."
The news comes almost a year after the initial hearings on the BitLicense took place, in New York in January. The full text of the revisions will be available in the coming days and will open another 30-day comment period.
A final version of the BitLicense framework is expected in January.
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