Departing New York state regulator Benjamin Lawsky revealed the final version of the BitLicense, the regulatory framework for digital currency businesses his department has developed over the past 18 months.
This is the third update to the Department of Financial Services' framework. It was initially expected to be completed in January.
In December Lawsky announced substantial updates to the first draft. Both were followed by comment periods in which the department invited industry feedback. It is one of the first and most comprehensive attempts to tailor rules for a nascent technology that Lawsky lauded for its potential to modernize the country's "disco-era payments system."
The updates to this final version are not as major as the changes of the last round, Lawsky said in his prepared remarks for a speech to be delivered in Washington on Wednesday. The latest changes clarify who exactly the department seeks to regulate under this framework and offer a simplified process for license applications.
The department will require digital currency businesses to seek prior approval for changes to their products or business models, but not for minor software or app updates. To that point, Lawsky said the agency intends to only regulate financial intermediaries, not software developers that arent holding customer funds.
The department also strives to avoid duplication where possible, he added.
Digital currency firms that seek both a BitLicense and a money transmitter license wont have to submit separate applications if they can satisfy the requirements for both. Lawsky said the department will work with these companies to have a one-stop submission process that covers all their bases.
Further, companies filing suspicious activity reports to federal regulators like the U.S. Treasury's Financial Crimes Enforcement Network can also avoid duplicating the process with the state for the same SARs.
Finally, Lawsky said that digital currency startups dont require prior approval from the department for each round of venture capital funding, unless the investor seeks to oversee the companys management and policies.
One of the most aggressive financial regulators in recent years, Lawsky recently announced he would leave the department to start a consulting firm, reportedly catering to digital currency firms.