Bitcoins are becoming more widely used as a form of currency online. People love its anonymous nature, and the fact their bank accounts can't be hacked and pillaged.
But Bitcoins aren't as safe as they're made out to be, which is one reason the New York Department of Financial Services is conducting a series of hearings regarding the regulation of the Bitcoin.
What will the focus of these hearings be? There will be many, and one important discussion will center around "BitLicenses", a term they've created to describe a certificate of sorts issued to a business that meets the department's yet-to-be-created standards regarding the e-currency.
The Important Issues
Besides determining proper rules for issuing BitLicenses and the standards that govern them, the department will take a look at how the legislation they create for the Bitcoin is related to current standards and procedures for wiring money electronically, according to a press release.
The BitLicenses they intend to discuss will address numerous issues that could arise, such as money laundering and the all-important consumer protections those holding a BitLicense will have to guarantee.
The Problem With Regulating The Bitcoin
Bitcoin is becoming more and more popular in the virtual marketplace. It's certainly come a long way from its initial use on the now defunct Silk Road illegal wares marketplace! But the reason it is gaining popularity is because it is unregulated. So won't regulating the form of currency lead to a decrease in Bitcoin value?
Experts agree that this is likely the case. But now that governments around the world are taking notice of the currency, which is now accepted in a high number of places around the Web, some experts disagree, and feel the Bitcoin isn't in as much trouble as you might think. Why? Even if the Bitcoin flops in the Western world, other parts of the world are quite interested. For example, the use of Bitcoins by people in China jumped recently, prompting the value of the currency to increase.
The Concerns of the NYDFS
So why regulate the Bitcoin? The NYDFS points to Silk Road as the main reason. They say it is time to put a stop to the illegal practices the Bitcoin can allow due to its anonymous nature, while offering consumers a safer experience. If we do not regulate the Bitcoin, says the NYDFS, the currency itself is threatened.
Other issues the NYDFS plans to work out include determining what types of online transactions will require a BitLicense is issued, the consumer protections covered in the BitLicense, guidelines protecting against money laundering, and the requirements for obtaining a BitLicense.
The NYDFS is in the initial stages, discovering all they can about virtual currency and the issues associated with it, prior to the first public hearing. It knows that the Bitcoin is here for now, but isn't sure if it will stick around, or if it is a passing fad. Regardless, its current popularity worldwide dictates the need for this discussion.