Magazine article Business Credit

NY Regulators Hand Alternative Payment Currency a Boost

Magazine article Business Credit

NY Regulators Hand Alternative Payment Currency a Boost

Article excerpt

More widespread business acceptance of tech-based alternative payment methods, notably the currency known as Bitcoin, in consumer and B2B spheres will continue to depend on some level of regulation and reliability. In June, Bitcoin may have made its greatest leap to date, whether rebellious creators and early users of alternative currencies want regulation or not.

Ben Lawsky, New York superintendent of financial services, unveiled "final" rules this month designed to guide companies based in the state that accept Bitcoin deposits or payments. New York is the first state to officially regulate Bitcoin in any way (though the new mandates do not apply to software developers), and the rules identify what it sees as some best practices. They also address compliance requirements regarding issues such as money laundering, as alternative currencies have notably been used by some crime syndicates as a go-around for moving money tied to activities such as drug distribution and weapons sales.

Other states are reportedly working to model their own future efforts on what New York is calling its "Bit-License" program, and more will likely follow. Continuing moves toward increased regulation are "inevitable," notes NACM Executive Vice President Rudet Fountain.

"This puts out a statement of 'get ready for the alternative currencies,' because they're coming and they're going to continue to exist, whether it's Bitcoin or something else," said Fountain, who believes alternative currencies could become another tool for B2B payments in the not too distant future. "The scary part is not knowing for sure which alternative currency will make it. It's similar to Beta versus VHS many years ago. The best technology doesn't always win out."

Reaction to the new regulations among those already versed in the alternative currency community can best be described as mixed. …

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