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Bitcoin: Lawsky softens 'BitLicense' requirements

Benjamin Lawsky, superintendent of the New York State Department of Financial Services
Scott Eells | Bloomberg | Getty Images
Benjamin Lawsky, superintendent of the New York State Department of Financial Services

After 3,700 public comments, the proposed licensing for bitcoin-related firms has been slightly relaxed.

Benjamin Lawsky, New York state superintendent of financial services, announced his new proposal for the so-called BitLicense in a Thursday speech. The changes to his office's first proposal are aimed at providing flexibility for virtual currency start-ups, he said.

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"Our initial proposal was meant as a beginning—not an end—to a healthy, vigorous public discussion about what the final regulation should look like," Lawsky said.

This final regulatory framework should be established by early 2015, Lawsky said, adding that his office hopes to have several licensed firms and exchanges in New York shortly thereafter.

Among the details to the new proposal are that neither software developers nor virtual currency miners will require a license to operate.

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Additionally, Lawsky said, investors holding virtual currencies for personal investment and retailers accepting these currencies won't need a BitLicense.

Lawsky also said that start-ups operating in the virtual currency space will be given two years to become fully compliant with the licensing law.

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"We believe that these proposed changes are sensible and help us strike an appropriate balance between permitting innovation to proceed, while at the same time strongly protecting consumers and helping root out illicit activity," he said.

The superintendent's office also eliminated the proposed requirement that licensees be required to obtain the addresses and transaction data for all parties to a transaction. Instead, relevant firms will only need to obtain that information for their own customers or account holders and, only whenever possible, for counterparties.

Lawsky also eased up on rules for record-keeping, shortening the required time from 10 to seven years for firms to maintain transaction information.

These changes, Lawsky said, will soon be posted, and will be subject to a 30-day comment period.