New York City Attempts to Shut Down Bitcoin

New York City Attempts to Shut Down Bitcoin Ben Lawsky, Superintendent of Financial Services at the New York State Department of Financial Services (DFS) announced on reddit today New York’s proposed new regulatory framework for virtual currencies. The regulations will be formally published in the July 23, 2014 edition of the New York State Register […]
Adam James
Posted by Adam James July 17, 2014 2 Mins Read
New York City Attempts to Shut Down Bitcoin Ben Lawsky, Superintendent of Financial Services at the New York State Department of Financial Services (DFS) announced on reddit today New York’s proposed new regulatory framework for virtual currencies. The regulations will be formally published in the July 23, 2014 edition of the New York State Register […]

New York City Attempts to Shut Down Bitcoin

Ben Lawsky, Superintendent of Financial Services at the New York State Department of Financial Services (DFS) announced on reddit today New York’s proposed new regulatory framework for virtual currencies.

The regulations will be formally published in the July 23, 2014 edition of the New York State Register – which starts a 45-day public comment period.

A copy is available here on the DFS website.

A summary of the regulations may be found below:

Entities are considered dealing in virtual currencies if:

  • They transfer Bitcoins on behalf of one person. This includes Bitcoin tipping, mixers, Blockchain.info Send Shared, CoinJoin, Dark Wallet (200.2n1)
  • They hold or have control over Bitcoins for their users. This includes Mining pools, Coinbase, Circle,Greenaddress.it, all exchanges. (200.2n2)
  • They buy or sell Bitcoins as a business activity. This includes Local Bitcoins sellers, #bitcoin-otc. FinCEN statements includes selling physical coinage (including casascius coins) also regulated. (200.2n3)
  • They create a virtual currency, even if it is decentralized. This includes creating altcoins. In fact, Satoshi would have commited a crime creating Bitcoin without registration. (200.2n5)
  • They trade any virtual currency, even for another virtual currency. This includes alt coin exchanges. Mintpal, Cryptsy, BTER, etc (200.2n4)

.. to any resident in New York. Web services, even those incorporated overseas, must either comply or block access for NY users. (200.2n)

Entities ‘dealing in virtual currency’ must:

  • Perform AML and collect identities, including verification of government issued Photo ID and proof of address, and retain these information for 10 years. (200.15a)
  • Retain all transaction logs for 10 years, including real name & physical addresses of ALL parties of a transaction – yes, including whoever you are sending to. (200.12a1)
  • Report all transactions over the USD value of $3000, and file Suspicious Activity Reports. (200.15g4)
  • Maintain collateral in the form of USD, including collateral for Bitcoin balances. The % as collateral is unspecified.
  • Retained earnings and profits of in invested in US dollars. They may not keep any profit in Bitcoin.(200.8b)
  • Forfeit Bitcoins that are inactive for over 5 years to the State of New York – (200.12c)
  • Not obfuscate any transactions – Bitcoin mixing would be illegal. (200.15f)

via r/bitcoin

For further explanation Ben Lawsky comments on CNBC 

The question on everyone’s mind is: How can New York regulate what you cannot inherently regulate?

The answer: You can’t.

Will these “regulations” have serious repercussions within the crypto community? My prediction is not at all.

 

 

Tags: