In our comment to the draft BitLicense last summer, we proposed changes intended to encourage a more efficient and effective regulatory structure for virtual currency businesses operating in New York. In December, the Department of Financial Services (DFS) released its revised BitLicense, which, to DFS’s well-deserved credit, accepted many of the industry’s proposed comments. But despite its improvement, the BitLicense retains two fundamental design flaws. First, the BitLicense unnecessarily duplicates federal anti-money laundering (AML) obligations. Federal guidance requires virtual currency exchanges (among others) to register as Money Service Businesses (MSBs) and establish risk-based AML policies in accordance with federal law. …read more