On November 14, 2013, the New York Department of Financial Services ("NYDFS") issued a Notice of Intent ("Notice") to hold a hearing on Bitcoin and other virtual currencies in their continued effort to establish the appropriate regulatory guidelines and standards for this emerging form of currency.
The Notice is the NYDFS' latest step toward regulation following its August 2013 public announcement that it had launched an inquiry into Bitcoin and other virtual currencies. In that announcement, the NYDFS expressed its concerns that certain virtual currency firms may be engaging in money transmission – which is an activity that is licensed and regulated by the NYDFS – and stated that it would evaluate whether to apply existing money transmission regulations or issue new regulatory guidelines tailored specifically to the unique characteristics of virtual currencies.
The NYDFS' upcoming hearing will primarily focus on the interconnection between money transmission regulations and virtual currencies. Notably, the hearing will also consider the possibility of issuing a "BitLicense" specific to virtual currency transactions and activities. The NYDFS stated that these licenses would impose anti-money laundering and consumer protection requirements on licensed entities.
The NYDFS intends to hold the hearing in New York City in the coming months at a time and location to be determined.
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