17 Dec 2014
US state bank supervisors issue model regulation for digital currencies - CoinDesk
FXStreet (Barcelona) - The CoinDesk Research Team notes that the Conference of State Bank Supervisors (CSBS) has released a draft proposal for regulating digital currency businesses, citing licensing and supervision requirements, along with adherence to AML/KYC regulations by gathering user data.
Key Quotes
“The membership group, which represents bank regulators from US state agencies but does not play a direct role in how states craft new financial rules, outlined a number of areas in which it believes companies that work with digital currencies should be supervised, including approaches to consumer protection, licensing and security.”
“Overall, the framework echoes elements of the New York State Department of Financial Services’ (NYDFS) BitLicense proposal. The draft framework targets those who exchange digital currencies or facilitate such activities, and explicitly identifies itself as “technology neutral”.”
“The CSBS suggests licensing and supervision requirements should apply to businesses that exchange virtual currency for fiat currency and virtual currency for other types of virtual currency; transmit virtual currencies; and facilitate the third-party exchange, storage or transmission of virtual currencies. The latter category is defined to include wallets, vaults, kiosks, merchant-acquirers and payment processors.”
“The draft framework includes eight areas in which the CSBS is pushing for digital currency regulation, which covers record keeping, cybersecurity protocols and transaction data standards.”
“Like the NYDFS, the CSBS wants digital currency businesses to gather information on those involved in transactions that they are party to, such as names and IP addresses. The framework calls for those firms to adhere to existing AML/KYC regulations and institute consumer protection measures including disclosure agreements, insurance mandates and secure data storage mechanisms.”
“The CSBS is also advocating for rules that will allow state regulators to share information and coordinate on investigations that involve digital currency businesses.”
Key Quotes
“The membership group, which represents bank regulators from US state agencies but does not play a direct role in how states craft new financial rules, outlined a number of areas in which it believes companies that work with digital currencies should be supervised, including approaches to consumer protection, licensing and security.”
“Overall, the framework echoes elements of the New York State Department of Financial Services’ (NYDFS) BitLicense proposal. The draft framework targets those who exchange digital currencies or facilitate such activities, and explicitly identifies itself as “technology neutral”.”
“The CSBS suggests licensing and supervision requirements should apply to businesses that exchange virtual currency for fiat currency and virtual currency for other types of virtual currency; transmit virtual currencies; and facilitate the third-party exchange, storage or transmission of virtual currencies. The latter category is defined to include wallets, vaults, kiosks, merchant-acquirers and payment processors.”
“The draft framework includes eight areas in which the CSBS is pushing for digital currency regulation, which covers record keeping, cybersecurity protocols and transaction data standards.”
“Like the NYDFS, the CSBS wants digital currency businesses to gather information on those involved in transactions that they are party to, such as names and IP addresses. The framework calls for those firms to adhere to existing AML/KYC regulations and institute consumer protection measures including disclosure agreements, insurance mandates and secure data storage mechanisms.”
“The CSBS is also advocating for rules that will allow state regulators to share information and coordinate on investigations that involve digital currency businesses.”