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New York is Targeting Bitcoins for Big Brother Regulation

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New York’s financial regulator will adopt rules to govern virtual currency firms with a view to combatting money laundering. The move comes in the wake of a series of hack attacks that have halted bitcoin transactions across the globe.

The state currency regulator announced on Tuesday that current  regulations governing currency transmissions would be adapted to  suit new digital currencies. The rules would make New York the  first US state to legislate for alternative cyber-currencies such  as bitcoin.

“Our objective is to provide appropriate guard rails to  protect consumers and root out money laundering – without  stifling beneficial innovation,” Benjamin Lawsky,  superintendent of New York’s Department of Financial Services,  said at a speech Tuesday in Washington.

As part of the regulations New York businesses wishing to use  cyber-currencies would have to obtain a “BitLicense.”   Lawsky highlighted the main obstacles in the fight against money  laundering and fraud with the new currencies. In particular, he  spoke about a possible ban on “tumblers” used to hide the record  and source of virtual currency transactions.

However, he argued that a blanket ban on “tumblers” was a complex  issue, because they could also have legitimate uses in the online  marketplace. Lawksy also said other issues would have to be dealt  with, such as the measures capital requirements firms should take  to absorb unexpected losses and whether firms should be permitted  to invest in cyber-currencies.

The discussion on virtual currency regulations comes after the  value of bitcoin plummeted on a big, Japan-based exchange on  Friday. Bitcoin lost 20 percent of its value, dropping to $960  per unit and prompting the exchange to halt customer withdrawals.

The volatile functions in the value of the currency had a  knock-on effect in Slovenia on Tuesday, where a Bitstamp also  froze customer withdrawals, blaming DDoS hack attacks.


Written by voiceoftruthusa

February 13, 2014 at 4:59 pm

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