'Regulated' Bitcoin exchanges planned in New York

By Catholic Online (NEWS CONSORTIUM)
3/12/2014 (4 years ago)
Catholic Online (https://www.catholic.org)

In a sign that the digital form of exchange in popularity - and by extension, legitimacy, New York's financial regulator has called on firms to submit proposals to set up "regulated" exchanges for currency such as the Bitcoin.

LOS ANGELES, CA (Catholic Online) - Wanting to better protect consumers and prevent money-laundering, the state's Department of Financial Services (NYDFS) said
It comes as a top Bitcoin exchange, Mt Gox, filed for bankruptcy last month.

Not governed by any financial regulator, officials thought it was high time to protect the trendy form of currency.

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"The fact is that virtual currencies are unlikely to disappear entirely," Benjamin Lawsky, New York's superintendent of financial services says.

"As such, turning a blind eye and failing to put in place guardrails for virtual currency firms while consumers use that product is simply not a tenable strategy for regulators."

There had been concerns on various fronts over the use of unregulated Bitcoins. It is highly difficult to trace transactions carried out using Bitcoins, which is one of the factors behind their popularity. The currency has been linked to illegal activity online.

Bitcoins are also seen by some as a route for tax evasion and money laundering.

Other nations have since taken action -- Russia has declared transactions using the digital currency illegal and China has banned its banks from handling Bitcoin trades. There have also been calls for the U.S. to do the same.

Singapore has imposed a tax on Bitcoin trading and using it to pay for services, after classifying it as goods, rather than a currency.

the Japanese government also said Bitcoin is not a currency and that some transactions using the virtual unit should be taxed.

Overall, the bankruptcy declared by Mt Gox has only added to the concerns. The firm filed for bankruptcy in Japan in February after losing about $473 million worth of customers' bitcoins to what it says was a hacking attack.

"The recent problems at Mt Gox and other firms further demonstrate the urgent need for stronger oversight of virtual currency exchanges," Mr. Lawsky says.

"Consumers should understand and receive appropriate disclosures about the potential risks associated with using virtual currencies or any other financial product."

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