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NYDFS mulling transitional BitLicense for small businesses

by Leon Pick
    NYDFS mulling transitional BitLicense for small businesses
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    Bloomberg reports that The New York Department of Financial Services (NYDFS) is considering a transitional BitLicense for small businesses and startups. So said Ben Lawsky, the Department's superintendent during a keynote address at the Money 20/20 conference in Las Vegas.

    The consideration comes in response to critical feedback on the BitLicense proposal. Many Bitcoin

    firms and individuals feel that if enacted, the current proposal would overburden smaller businesses, forcing them to close and stifling innovation.

    A lighter version of the license would take into account factors like: the business's transactional volume, mitigating risk controls already in place, the nature of the business and whether it is already registered as a Money Services Business with FinCEN.

    These factors would seem to account for recent arguments that rules should be "risk-based" and that existing FinCEN regulations are already sufficient.

    Small businesses which meet the right criteria would be allowed to operate under a more relaxed regulatory framework for a given period of time. The specific elements of License which would be affected weren't discussed. It is expected that they would appear in the final draft, slated for January.

    Lawsky emphasized the importance of preventing Money Laundering

    , "which facilitates sometimes unspeakable crimes." At the same time, balance is needed, as already observed when regulating small financial institutions: "We recognize that if a financial firm has 12 employees – and nine of them are compliance officers – that is not a winning business model."

    Bloomberg reports that The New York Department of Financial Services (NYDFS) is considering a transitional BitLicense for small businesses and startups. So said Ben Lawsky, the Department's superintendent during a keynote address at the Money 20/20 conference in Las Vegas.

    The consideration comes in response to critical feedback on the BitLicense proposal. Many Bitcoin

    firms and individuals feel that if enacted, the current proposal would overburden smaller businesses, forcing them to close and stifling innovation.

    A lighter version of the license would take into account factors like: the business's transactional volume, mitigating risk controls already in place, the nature of the business and whether it is already registered as a Money Services Business with FinCEN.

    These factors would seem to account for recent arguments that rules should be "risk-based" and that existing FinCEN regulations are already sufficient.

    Small businesses which meet the right criteria would be allowed to operate under a more relaxed regulatory framework for a given period of time. The specific elements of License which would be affected weren't discussed. It is expected that they would appear in the final draft, slated for January.

    Lawsky emphasized the importance of preventing Money Laundering

    , "which facilitates sometimes unspeakable crimes." At the same time, balance is needed, as already observed when regulating small financial institutions: "We recognize that if a financial firm has 12 employees – and nine of them are compliance officers – that is not a winning business model."

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