New York finance regulator backs Bitcoin

BitcoinSuperintendent of New York financial services, Benjamin Lawsky, known for its tough stance against money laundering, believes that Bitcoin has reached a turning point where the potential benefits outweigh the risks of illegal activities.

Lawsky, one of the most aggressive representatives of a financial supervisory authorities in the U.S., has expressed support for Bitcoin during a video interview with the Financial Times, given that Wednesday is the second day of hearings on the regulation of virtual currency.

This week, the Justice Department accused one of the most avid promoters of Bitcoin, Charlie Shrem with helping to provide money to drug dealers and buyers on the Silk Road website, closed last year by the FBI for illegal financial transactions.

Lawsky said the arrest suggests that Bitcoin is entering an era where entrepreneurs will comply with the regulations relating to money laundering.

“My hope is that Bitcoin is very much at a tipping point and is moving from an earlier phase when it was dominated by some individuals who were more interested in the illicit nature of it, and what they could hide from people, and moving into a phase where it is more mainstream and will start to realise a lot of the benefits of digital currency,” Lawsky said.

Department of Financial Services led by Lawsky wants New York to be the first U.S. state to issue clear regulations relating to companies which engage in transactions with virtual coins and force businesses to register as money transmitters.

These companies will have to follow the rules on money laundering, including checking the identity of the customers and monitor suspicious transactions.

The hearings began on Monday and included the Winklevoss twins investors and venture capitalist Fred Wilson, who argued that the regulation of Bitcoin is required to end the “Wild West” of virtual coins.

Lawsky and other members of the department of financial services in New York are interested in the possible benefits for using the Bitcoin as a faster and cheaper method of money transfer compared to the banking system.

One option under discussion is to create a “bit-license,” special adapted for  companies doing virtual currency transactions.

The objective is to develop virtual coins that would not be a paradise to money laundering but provides numerous benefits for companies and customers, according to Lawsky.

Reply