New York Issues BitLicense Rules To Mixed Reviews
On Wednesday, New York State announced new rules that will govern cryptocurrency-based businesses designed to protect consumers in the increasingly popular digital currency space.
The regulations are expected to create a safer environment for consumers, but many bitcoin enthusiasts say that the government's attempt at regulation will stifle growth in the industry.
The new set of regulations require any company that deals in virtual currencies to obtain a "BitLicense" to prove that it meets the state's guidelines for safeguarding customer funds. The license can only be obtained by firms with adequate security and customer protection standards and anti-money laundering practices in place.
Related Link: Should The UK Regulate Bitcoin Wallets?
The Benefits Of BitLicenses
A spate of high-profile scams involving bitcoin have created a sense of mistrust among the general public when it comes to using cryptocurrencies. The state's regulations could persuade more average investors to use bitcoin as they require more stringent customer protections for bitcoin-based transactions, thus creating a safer space to use the currency.
Others are criticizing the new regulations, saying they are bound to stifle innovation in the cryptocurrency space. The rules say that digital currency firms must gain approval for things like product changes and taking on new controlling investors, something most firms say will waste time and money. These rules could simply add to the red tape associated with starting a new business, and will discourage entrepreneurs from entering the digital currency space.
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