Wall Street regulator to issue final bitcoin rules

New bitcoin regulations will be one of the final acts for top Wall Street regulator, Benjamin Lawsky.

Lawsky announced Wednesday that he would be stepping down in June from his post atop the New York Department of Financial Services (NYDFS).

The Wall Street Journal reported Thursday that Lawsky plans next week to issue his long-awaited BitLicense, which will implement heightened oversight and disclosure mandates for companies using bitcoin.

{mosads}The rules could also set the tone for how other regulators approach cryptocurrencies, which can be exchanged for goods or physical money.

While digital currencies have spurred a booming market, regulators have grown increasingly concerned that largely untraceable cryptocurrencies are aiding money launderers and digital criminals.

But digital money advocates say BitLicense, which has been in draft form for nearly a year, is not the solution. They argue the costs of compliance will create high barriers to entry, discouraging innovators and pushing out small businesses from the rapidly expanding market.

The most recent iteration of BitLicense, issued in February, rolled back some of the proposal’s stricter requirements.

But bitcoin advocates still maintain the regulations are too broad, and could apply to bitcoin users and businesses that are not involved in money transactions.

Lawsky told The Journal these fears were overblown.

“We make it crystal clear that we are not going to regulate software providers or software creators or people doing code,” he said. “The MIT student has nothing to worry about. We are only regulating financial intermediaries.”

The NYDFS recently became the first regulator to approve a banking license for a bitcoin exchange, allowing the company to expand its financial operations.