NY regulator updates virtual currency rules

2015 rules revised to simplify and streamline ways operators can use digital coins

                                

The New York financial regulator has updated its rules on virtual currencies for the first time in five years.

It is a response to the growing universe of coins available and the rise in transactions that take place using digital money.

The New York Department of Financial Services invited comments from market participants on two proposals that should be submitted by January 27, 2020.

The NYDFS is seeking to simplify the process under which holders of virtual currency licences can use and offer different coins.

There has been rapid growth in the crypto-market, both in the number of operators and exchanges and the number of different currencies.

Daily volume in Bitcoin, the world’s largest by-market capitalisation, has regularly topped $20 billion throughout most of this year.

Last year 24-hour volume struggled to reach even $10 billion, aside from the spike to nearly $20,000 in January.

The department proposes creating a website with a list of all the currencies that it permits licencees to use in their virtual currency business activities. These would not require the prior approval of the regulator.

The department also proposed a framework under which a licence-holder could create a coin listing that was specific to its business model and risk profile. This would allow licencees to “self-certify the listing or adoption of new coins” in addition to those coins already approved on the proposed website.

When the NYDFS first updated its virtual currency rules in July 2015, the entire cryptocurrency market was estimated to be worth around $4.9 billion. Today the figure is nearly $196 billion, according to data from CoinMarketCap.

Blockchain.com estimates that on a one-week rolling basis, an average of around 308,000 transactions take place in Bitcoin alone.

This is down from the record average of just over 400,000 in late 2017 but up from the two-year low of around 180,000 logged in April that year.

FURTHER READING: Where is the cryptocurrency industry heading in 2020?

FURTHER READING: Ripple price prediction: how will XRP perform in 2020?

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