NY state 'BitLicense' plan won't impact Bitcoin software developers

New York officials say that developers working with digital currency will not need to obtain a license in the state -- but who will?

Credit: CNET

Officials for the state of New York say that virtual currency software developers will not need to obtain a license to operate in the area.

On Tuesday, as reported by Reuters, Benjamin Lawksy, superintendent of financial services for the state of New York said digital currency software developers would not need to apply for a license to operate in the state.

The remark follows the unveiling of a plan known as "BitLicense," which was formally launched in July. US regulators hope the plan -- which will reach a revised proposal stage by the end of October -- will result in better regulation of the cryptocurrency industry.

The BitLicense plan will focus on the financial aspects of cryptocurrency, including consumer protection and the prevention of money laundering and fraud. According to the New York State Department of Financial Services (DFS), proposed regulation also includes mandatory receipts for Bitcoin transactions, customer complaint policies, anti-money laundering compliance and company verification of account holders.

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Each licensee may also be required to monitor transactions that might signify money laundering, tax evasion, or other illegal or criminal activity and report such activity to the DFS.

However, in a speech at the NY-based Benjamin N. Cardozo School of Law, Lawsky said:

"We are regulating financial intermediaries. We are not regulating software development. To clarify, we do not intend to regulate software as software or software development. For example, a software developer who creates and provides wallet software to customers for their own use will not need a license."

As a result, companies and developers working on platforms for virtual currencies will not require a license to operate, and neither will individual users who trade in cryptocurrency.

In related news , speaking at the Crypto Valley Summit in the Isle of Man earlier this year, white hat hacker and security expert Konrads Smelkovs told ZDNet that the cryptocurrency industry must "grow up" in order to survive.

"It started out with 'pirates,'" Smelkovs said. "But now the industry needs to grow up in terms of becoming 'more like the establishment' it originally rebelled against."

Read on: Cryptocurrency, Bitcoin