New York’s top financial regulator Benjamin Lawsky warned that the US financial industry may see government intervention if banks do not commit to innovating the payment system of their own accord.
“If banks do not make significant progress soon, regulators should consider actively pushing for, or even perhaps mandating, improvements,” said Lawksy.
Lawsky spoke at a Bipartisan Policy Center event in Washington on Thursday. The superintendent of the New York Department of Financial Services used his speech to announce revisions to draft crypto-currency regulations.
In response to an organised public comment period on the proposed ‘BitLicense’, Lawsky clarified that software developers, miners and those who issue loyalty and rewards schemes and gift cards denominated in fiat currency will not be required to obtain a BitLicense. Neither would individuals who buy and hold virtual currency for personal investment, as well as virtual currency-accepting merchants and their customers.
Licensees need only keep transaction records for seven years rather than 10, and the stipulation that they must obtain addressed and transaction data for all parties in a transaction has also been removed, Lawsky said. Licensees now only need that information for their own customers or account holders, but should attempt to find it for counterparties when possible.
Only financial intermediaries will face regulation by the NYDFS. In November, Lawksy also proposed a two-year transitional Bitlicense for startups who are unable to satisfy each of the requirements of the full BitLicense as they build their operations
The NYDFS received more than 3,700 comments from the community on the proposed regulations, which are all publically available on its website. Lawsky said that the comments showed the financial regulator that the original proposal would not work in a virtual currency context.
A final version of the BitLicense framework is expected in January, one year after the initial hearings began in New York.
Lawsky attributed the excitement over virtual currency to the current market failure of the payments system. While virtual currency “could have the potential to force the existing, legacy payments system to up its game in a significant way,” he said, “virtual currencies such as Bitcoin are a very, very long way from being a credible challenger to banks or the existing payment system.”
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