Bitcoin — the preferred digital currency for anyone looking to buy 10 hits of LSD on the internet — just got the official Empire State seal of approval. This September, New York State regulators approved the first-ever license to a company dealing in virtual currency. And this “BitLicense” could be the first of many.
Because bitcoin is the first virtual currency to be widely adopted (and because it’s the preferred currency of people who buy and sell credit card numbers online), it’s been called the “Wild West” of the financial industry. Regulators hope the licenses will bring consumer protection and cybersecurity guidelines to the budding industry.
Circle Internet Financial is a Boston-based company with offices in San Francisco, Dublin, London, and New York. The company provides consumer payments services, and allows customers to send and receive money in both U.S. dollars and bitcoins. It’s now the proud holder of the first BitLicense.
State regulators now require licenses for virtual currency companies that want to do business with New York residents. So far, 24 companies have submitted applications since the final rules were announced in June. To receive their license, Circle Internet Financial had to run the bureaucratic gamut, outlining security protocols, capitalization, money laundering controls, consumer protections, and guards against illegal transactions.
Today, about 61% of global Internet users research products online. But if you know where to look, you can find less-than-legal black markets on the “dark web.” Most famously, federal investigators recently shut down the notorious Silk Road, an online store that sold all manners of illegal drugs. Bitcoin is favored for such transactions, but it’s also gaining legitimacy as a virtual currency.
Now that bitcoin is getting backing from mainstream investors and corporations, the New York Department of Financial Services wants to ensure virtual currency companies are monitored like traditional financial services.
“Issuing the first BitLicense is an important milestone in the long-term development of the virtual currency industry,” said department Superintendent Anthony Albanese. “Putting in place rules of the road … is vital to building trust in this new financial technology.”