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March 12, 2014updated 04 Apr 2017 4:08pm

New York accepting applications for Bitcoin exchanges

New York's financial authorities have said they will be accepting applications for Bitcoin and other virtual currency exchanges.

By Hannah Smithies

New York’s financial authorities have said they will be accepting applications for Bitcoin and other virtual currency exchanges.

"The companies that are now being asked to come apply in this order are going to largely be the companies that say, ‘we have the desire, wherewithal and the resources to do this the right way’," Benjamin Lawsky, superintendent of financial services said.

"We are creating a situation where we’ll hopefully be driving consumer confidence in the firms that want to come here now and set up their exchanges with all the appropriate protections in place."

Details of the regulating system for the virtual exchanges are yet to be announced. The office said they would be released by the end of the second quarter of 2014.

Government agencies worldwide have been struggling with how to regulate Bitcoin – its lack of a central regulator, volatile market price and, more recently major security issues at prominent exchanges have made the cryptocurrency controversial.

The department explained that dealing with the new currency head on was a better strategy than ignoring it: "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," Lawsky said.

Several countries have rejected its status as legal currency yet New York’s move towards the technology may mark the beginning of a new positive wave of legislation by traditional financial authorities.

He concluded: "If we do it right, it could be a nice model for other states."

 

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