New York Legislator Proposes BitLicense Alternative for Cryptocurrency Users
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In recent years, cryptocurrency has raised important legal questions as its public popularity has increased. Cryptocurrency is a virtual currency that bitcoin regulation in new york created and controlled through the use of sophisticated encryption methods known as cryptography.
The most well-known is Bitcoin, a digital currency created inwhich many believe is the economy of the future. Digital currency is decentralized, meaning that no central organization has control over the funds, essentially immunizing virtual currency from government regulation. Given the anonymous nature of cryptocurrency, lawmakers are challenged with the bitcoin regulation in new york of regulating these virtual transactions.
Many believe that a great advantage to purchasing cryptocurrency is its invulnerability to fraud. Because they are digital, cryptocurrencies cannot be counterfeited. Bitcoin regulation in new york, cryptocurrency protects against theft, unlike credit card transactions. While these protections seem advantageous, critics believe the lack of oversight of this new technology facilitates illegal activities.
Also, cryptocurrency data structures are susceptible to hacking, which can cause exchange rates to fluctuate because prices are based on supply and demand. Cryptocurrency removes banking bureaucracy because it is owned entirely by the purchaser: An attraction of cryptocurrency is its elimination of third parties, low transaction fees and global accessibility. However, increased exposure to the global commerce system has catalyzed a discussion on bringing regulation to cryptocurrency.
The New York State Department of Financial Services has underscored a continued need for oversight on the cryptocurrency industry. This is due to the increased speed of transactions enabled by blockchain technologies, a network of computers used to mutually manage the database that records virtual transactions. Worldwide payment systems like Bitcoin are managed by blockchain networks, on a user-to-user basis, and not by a central agency. According to Melanie Swan, author of BlockChain: Blueprint for a New Economydecentralized networks are the next big thing in technology.
With this bitcoin regulation in new york development in web infrastructure, the DFS bitcoin regulation in new york implemented several policies in response. As a way to exercise oversight of blockchain technologies, the finance department conducts examinations of virtual currency companies at least once every two years.
DFS examinations include inspections of books, records and other company items. Out-of-state businesses that engage in virtual currency business activity involving New York State, or with persons within the state, must obtain a BitLicense to continue their business. Some of those companies have obtained BitLicenses, while others have been bitcoin regulation in new york banking charters as an alternative opportunity for oversight.
While cryptocurrency is in its early stages of development and is not likely to replace traditional tools of global commerce, its rising popularity has catalyzed a narrative on cryptocurrency laws and regulations. Learn more about cryptocurrency laws and regulations and how New York State is playing a role in examining businesses and licenses. If you have additional legal questions feel free to contact HoganWillig at Amherst Buffalo Ellicottville Lancaster Lockport.
Understanding Bitcoin, Blockchain and Bitlicenses. By Pia Perfetto on January 11, The Good and The Bad Many believe that a great advantage to purchasing cryptocurrency is its invulnerability to fraud.
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