It’s only been about a week since New York’s outgoing Superintendent of Financial Services Ben Lawsky released the long-awaited “BitLicense” rules for digital currency businesses operating in New York, but it’s not too early to try to assess the potential impact of those rules on the development of Bitcoin-related businesses and emerging financial technologies.
The primary question on everyone’s mind: Are the BitLicense regulations – the product of a nearly two-year rulemaking process – good or bad for Bitcoin? The answer: A little of both. The truth is that the BitLicense rules are a mixed bag, and how you perceive them depends to some extent on whether your glass is half-full or half-empty.
The “Glass Half-Full” Perspective
As an initial matter, the BitLicense rules represent an attempt to bring regulatory clarity and stability to an uncertain environment. Ask the entrepreneurs, engineers, venture capitalists, and bankers who are pouring their time, energy, and money into bitcoin-related businesses, and they’ll tell you that regulatory clarity is good for business. As Perianne Boring, the President of the Chamber of Digital Commerce, recently observed in another context, “Investors don’t fear regulation, they fear uncertainty.”
The BitLicense regime also confers greater legitimacy on Bitcoin. Indeed, the fact that the BitLicense rules exist at all reflects a recognition by one of the nation’s most important financial regulators that Bitcoin is here to stay and that its underlying blockchain technology is a potentially transformative force in our economy and society. With companies like Goldman Sachs, the New York Stock Exchange, and IBM now exploring the blockchain’s potential to improve everything from international securities settlement to the emerging “Internet of Things,” it’s on balance a positive development that NYDFS has crafted regulations tailored to digital currencies instead of trying to shoehorn this new technology into a set of regulations created during a
Originally appeared at: http://www.lexology.com/library/detail.aspx?g=14b2e9a8-fd47-485d-bde3-e0739ab224d9