regulator

What Would a BitLicense Look Like?

[Reading Time: 7 minutes]

Last November, the New York State Department of Financial Services issued a notice communicating its intent to hold a hearing on virtual currencies, with the purposes of reviewing “the interconnection between money transmission regulations and virtual currencies,” and considering “the potential issuance of a BitLicense specific to virtual currency transactions and activities.” The hearings are scheduled to be held on January 28 and 29 in downtown Manhattan.

I thought it would be useful to start a conversation on this topic by offering my experience-based perspective on the New York state licensing and examination process, and by posing a few trigger questions.

By way of background, the reason virtual currencies, New York and licensing appear in the same sentence is that in March of 2013, the United States federal government issued guidance equating virtual currency exchangers and administrators with money transmitters, a category of non-depository financial institution that in the United States, to the chagrin of crypto-preneurs worldwide, is subject to licensure by individual states.  Licensing is intended to subject industry participants to a supervisory authority primarily for purposes of Continue reading →

2013-09-01 Crypto-Timeline

Here is a log with relevant legal, regulatory, law enforcement and business risk milestones in the crypto-currency race to maturity with links to trusted sources.

The  Key August 2013 Crypto-Events were:

• 8/1/2013 – Tangible Cryptography (FastCash4Bitcoins) suspends Bitcoin-related transactions
• 8/2/2013 – Federal Judge declares Bitcoin a currency
• 8/12/2013 – New York State Department of Financial Services examines virtual currency practices
• 8/12/2013 – New York subpoenas Bitcoin firms in proble on criminal risk
• 8/12/2013 – U.S. Congress starts looking into Bitcoin
• 8/14/2013 – Top US compliance experts and industry players meet in first virtual currencies compliance conference [speakers and some presentations are listed here.]
• 8/15/2013 – Commonwealth Bank closes CoinJar’s business and founders’ personal accounts
• 8/18/2013 – Germany officially recognizes Bitcoin as ‘private money’
• 8/19/2013 – Mercatus Center publishes a Bitcoin Primer for Policymakers, a fine compendium of its Continue reading →

Say No to Nonsense

[Reading time: 5 minutes]

It has been over ten years since the enactment of the USA PATRIOT Act shone the spotlight over all financial institutions and their AML, BSA, CFT and regulatory compliance programs.

Throughout this time much has been written about the rules and regulations that apply and do not apply to each type of financial institution, the perceived and real threats of non-complying with them, and the dozens of cases in which institutions have failed to meet the expected standards and suffered the consequences.  In the case of MSBs, a lot has also been written about the difficulties they have faced in obtaining and retaining banking relationships, which continue to this day.  Very little, however, has been written by compliance officers about what the world looks like from within their organizations.  Understandably so, one might say, given that it may be inappropriate or, if one believes that there might be adverse personal consequences in doing so, simply foolish.

I do not subscribe to the latter.  I believe the best way to fully understand and resolve the issues is to bring Continue reading →