Performing retail conversation services controlling

A Light Touch of Regulation for Virtual Currencies 317

Of note is that the US state of New York has begun to consider creating a “BitLicense”for Bitcoin businesses (New York State Department of Financial Services, 2014a), the details of which are beginning to emerge. The proposed regulations have broad coverage, having defined “virtual currency” as “any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology” (New York State Department of Financial Services, 2014b). A license is requiredfor receivingortransmittingvirtual currency on behalf ofcustomers,storingvirtual currency on behalf of customers, buying and selling virtual currency as a customer business, performing retail conversation services or controlling, and administering or issuing a virtual currency. Consumers or merchants who use virtual currency solely for the purchase or sale of goods and services and firms chartered under the New York banking law to conduct exchange services and approved by the superintendent to engage in virtual currency busi-ness activity are exempted from licensing. The main changes to the virtual currency land-scape are that a license is now required and that licensees will have to comply with standards intended to, among others, prevent money laundering, ensure consumer protection, and enhance cyber security (New York State Department of Financial Services, 2014a,b).

The regulatory atmosphere in the United Kingdom is considerably more relaxed at pre-sent, with no formal requirements imposed by its financial conduct regulator. This hands-off approach has not stopped many Bitcoin businesses operating in the United Kingdom

318 Handbook of Digital Currency

In Murphy’s eyes, therefore, the future of virtual currencies will be found in active engagement and coexistence among stakeholders—the virtual currency industry, the regulators, and traditional financial institutions—with each continuing in their niche areas while meaningfully coexisting with one another to the betterment of the economy.

16.4.6 Laissez-faire or no regulation yet