The New York State Department of Financial Services [DFS] has created rules for the use of Bitcoins. Under their rules, Companies trading in Bitcoin and other virtual currencies would be required to hold enough of the currencies to cover their debts to customers and would have to verify the identities of account holders as a protection against money laundering.

Also announced:
• require virtual currency traders to develop customer complaint procedures
• adopt cybersecurity policies
• submit to examinations by the DFS in exchange for a so-called BitLicense to trade in virtual currencies.

DFS Superintendent Benjamin Lawsky said: “We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity—without stifling beneficial innovation. Setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets.”

New York would be the first state to issue virtual currency regulations.