Topic: [2014-07-17] Bitcoin regulation in state of New York is announced. (Read 5705 times)

Glad i don't like in New York, and I live thousands of miles and thousands of miles away from it

Should be on frontpage of MW

I got the most sensible answer to the "State of New York" or any other state

Great point. They should totally do this.

It will help more businesses and individuals realize that a bank account is a liability, not an asset.

Bitcoin is fungible therefore you really cannot discriminate as to where the coins came from.

Even if a business were to not "accept" bitcoin "from" darkwallet and/or TOR, someone could easily use either of these to send to a new bitcoin address and then pay for the goods/services.

I'm guessing this will apply to anybody trading bitcoins or otherwise falling under these definitions who uses a correspondent bank in NY too, Standard Charter NY is the correspondent bank for almost every worldwide bank and remittance corp dealing in USD I could see them reaching in there and freezing transfers even if you never sell or buy a coin in NY state.

The simple solution to this is for vendors to not offer products and services to unvetted customers so they are never exposed to that risk.

A suitably-designed web of trust could makes the process of distributed vetting reasonably effective.

Tell those companies to use Open Bazzar, silk road or register their company in another place where the laws are less of a burden to them.

"Yes, I would like to buy your product. Do you take unregistered bitcoins through Darkwallet and Tor? You do? Thank you, you're under arrest."

Yeah, not exactly a great solution for companies who'd like to open shop in NY. They actually reside in New York and then have to comply with the local laws. It'd be an option for NY citizens, but are they affected by those regulations, to begin with?

The New York Department of Financail Services exists since 2011.  New York State Banking Department and New York State Insurance Department unify in a single agency, and Ben Lawsky becomes the first Superintendent.
see wikipedia  http://en.wikipedia.org/wiki/New_York_State_Department_of_Financial_Services

To the matter at hand.  Proposed regulations on "virtual currency businesses" provide citations for statutory authority.  I haven't looked into the wording of the Financial Services Law, yet I make this post now because some of the contents of the proposed regulations appear questionable as a matter of common sense.

On what basis does a State regulator purport to have such authority that he may require business entities to retain "earnings and profits" only in government bonds, money markets and similar instruments?  I don't see how such a draconian restriction can abide within the spirit of the Financial Services Law, and it may well violate the letter of that law.  It may even violate the U.S. Constitution's restraint of trade clause.

Such egregious overreach brings into question the legitimacy of this entire proposition. The matter may require judicial attention.

If we presume that Benjamin Lawsky acts within the ambit of his Department as delineated under the Financial Services Law in letter and spirit, we abdicate our responsibility.  The NYDFS works for us; not the other way around; we bear responsibility for keeping vigil over this bureaucracy and policing it to prevent abuses.

I encourage readers to research the law.

(b) Each Licensee shall be permitted to invest its retained earnings and profits in only the following high-quality, investment-grade permissible investments with maturities of up to one year and denominated in United States dollars:
 (1) certificates of deposit issued by financial institutions that are regulated by a United States federal or state regulatory agency;
 (2) money market funds;
 (3) state or municipal bonds;
 (4) United States government securities; or
 (5) United States government agency securities.

Statutory Authority: Financial Services Law, sections 102, 202, 301, and 302

Can anyone tell me why this got moved out of the Press section? This was the first to break the news on here.

Lawsky strikes me as being more concerned he is in the spotlight progressing his career than have a novel thought in his head on virtual currency regulation.

Indeed.
This is REALLY annoying.

This goes on to show how much the U.S. will go just to tax people.

Because we weren't getting taxed, we have low transaction rates.
But now, BTC is being taxed?
This is just unacceptable.

God I hope not.  The federal regs already exist and they are down right reasonable compared to the countless pages of nonsense that NY is proposing.   The feds never followed the states when the jumped the shark on money transmitter licensing.  In an optimal scenario the feds won't expand on the existing regs.  The chairman of FinCEN testified that existing regulations were more than sufficient.

It is more of a clarifying statute. If it wasn't explicitly stated them it would always be up to interpretation.  Business likes to see exemptions explicitly defined in black and white.  Anything which reduces uncertainty is a good thing. 


Correct.  Banks are exempt from all provisions of the regulations. Banks are also exempt from regulations for other MSBs (i.e. money transmitters, prepaid debit cards issuers, gift cards, etc) both at the state and federal level.  It is important to point out that the BSA already imposes similar KYC/AML requirements on banks so it isn't like they aren't regulated by anyone.  Still it is much nicer to be regulated by a single federal authority with a few well defined regulations than by the ever changing sea of regulations that state regulators come up with.  

As a side note, this is one reason why all prepaid credit/debit/gift cards are now issued by banks.  Yes even Discover Card and American Express are now nationally chartered banks.  Even major businesses like amazon and starbucks don't issue their own gift cards because at the state level the regulatory red tape makes it prohibitive. Instead they have a nationally chartered (and thus exempt) bank do the issuance for them in return for a fee.   The insane amount of regulatory overhead made it cheaper for issuers to become banks then try to remain compliant with 50+ state regulators. On a long enough time line we may see exchanges do the same thing, become banks to escape the neverending red tape that is state regulators.

BTW NY isn't exempting the banks because they are nice, they are just accepting reality.  A federal banking license makes what NY thinks irrelevant as federal law already exempts them from state regulators.

It's curious they used a law regarding sports betting and turned it against poker.

This is insane. This is why living outside the US is much better, they couldn't do anything about it.

You are wrong and it is very clear. Here is one example.
They create a virtual currency, even if it is decentralized. This includes creating altcoins. (200.2n5)
So creating an alt coin like Satoshi did would land you in jail if NYC found out.

That strategy didn't work for Full Tilt Poker.  http://en.wikipedia.org/wiki/United_States_v._Scheinberg

Interesting choice. Isle of Man was one of the 14 countries outside the US that Full Tilt poker kept servers and bank accounts.  When the DOJ said jump they said how high and rubber stamped seizure warrants.