
Robert A. Marsico
Partner
201-896-7165 rmarsico@sh-law.comFirm Insights
Author: Robert A. Marsico
Date: August 5, 2014
Partner
201-896-7165 rmarsico@sh-law.comNew York is poised to become the leading authority on virtual currency (generally referred to as “Bitcoin”) regulation. The New York State Department of Financial Services (“NYSDFS”) recently published a Notice of Proposed Rulemaking regarding the regulation of such virtual medium of exchange.
As noted in the NYSDFS proposal, the proposed regulation is intended to protect members of the public by imposing regulatory standards on virtual currency transactions and services that involve New York or New York residents, ensure the solvency, safety, soundness, and prudent conduct of persons or entities engaged in virtual currency business activity, and to foster the growth of the financial industry in New York by setting forth clear guidelines that will inspire confidence and allow for the establishment of legal virtual currency business activity.
Concerns about security and reliability are two key reasons why virtual currency is not yet a mainstream form of payment. In its early days, Bitcoin was often associated with nefarious activities, such as anonymously purchasing guns or drugs online. Even when used to make legitimate purchases, the lack of legal protections makes transactions more susceptible to fraud.
Ben Lawsky, Superintendent of Financial Services at NYSDFS, spearheaded New York’s effort to regulate virtual currency. While once an outspoken critic, Lawsky’s stance on Bitcoin softened greatly after talking to stakeholders in the industry, including lawyers, consumers, and business owners. While he once characterized the virtual currency as a “threat to national security,” he now sees the potential of the technology, albeit with proper safeguards in place.
Nonetheless, Lawsky acknowledged that crafting the new regulation was not easy. “Fashioning appropriate guardrails for virtual currencies presents challenging questions for regulators,” he stated at public hearings held in January. “Virtual currency is not easily categorized within the divisions we traditionally think about when it comes to the financial system (such as banks, insurers, or money transmitters). It’s neither fish nor fowl.”
Under the rule proposal, “virtual currency businesses” would have to obtain a license from NYSDFS. The definition encompasses a number of industry players, such as Bitcoin exchanges, digital wallet apps, and merchant service providers, but excludes consumers, retailers, and entities chartered under the New York Banking Law to conduct exchange services (and approved by the Superintendent of Financial Services at NYSDFS to handle Bitcoin transactions)..
Licensees would be subject to various compliance obligations, such as developing and enforcing anti-fraud, anti-money laundering, cybersecurity, and data security procedures. They would also be subject to capital requirements and biennial examinations.
The comment period on the proposed regulations runs through August 31, 2014.
If you have any questions about this post or would like to discuss the legal issues surrounding virtual currency, please contact me, Robert Marisco, or the Scarinci Hollenbeck attorney with whom you work.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]
Author: Dan Brecher
NYC Real Estate and Litigation Attorney Ryan O. Miller and Team Join Scarinci Hollenbeck, LLC New York City, NY – August 13, 2025 – Scarinci Hollenbeck, LLC has strengthened its Real Estate and Litigation practices with the addition of four New York City-based attorneys. Ryan Miller, who joins as a partner, is well known for […]
Author: Scarinci Hollenbeck, LLC
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Author: Dan Brecher
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
Author: Dan Brecher
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Author: Angela A. Turiano
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Author: Dan Brecher
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!