Virtual Currency Regulation: Analysis of New York’s Proposal

The New York State Department of Financial Services (“NYDFS”), the state regulator for the financial services and insurance industries, recently proposed a framework for regulating virtual currency activities (the “Proposed Rules”). Although various federal and state regulators have officially acknowledged the existence of virtual currencies, only a few have addressed how they may be regulated. Only the NYDFS has issued a proposal relating specifically to the establishment of a separate framework for regulating virtual currencies. In this article, SRZ partner Donald J. Mosher, special counsel Kara A. Kuchar and associate Melissa G.R. Goldstein provide notable observations about and a summary of key aspects of this first-of-its-kind proposal.