The New York State Department of Financial Services’ (NYSDFS) is currently considering regulations for virtual currencies (e.g. Bitcoin). While ITIF believes that the State of New York is likely the wrong entity to address these important policy issues, we have offered a number of recommendations should it continue to pursue these regulations. To strike the right balance that helps protect customers and root out illegal activity without stifling innovation or competition, New York should foster new entrants and budding virtual currencies without burdening their adoption with heavy-handed reporting requirements. Virtual currencies may be the next wave of innovation in our country’s financial services or they may be just a flash in the pan. Only time and a light regulatory touch will tell.
