Study on the U.S. state of New York bitcoin licence system

Study on the U.S. state of New York bitcoin licence system



In the continuous development of the virtual currency, the U.S. regulation of virtual currency at the forefront of the world, the regulation is mainly based on the traditional American currency transfer method. The federal level to control the virtual currency and exchange them into money transfer regulation, it must register; at the state level, Texas state regulatory framework for virtual currency into the traditional money transfer method, New York is introduced specifically for virtual currency regulation. This is the first specifically for virtual currency legislation, supervision essence it continues the currency transfer method, only for the money transfer behavior of the establishment of an administrative license, is also a continuation of the currency transfer method is the focus of supervision, consumer protection and anti money laundering; at the same time, it highlights the special regulatory requirements of virtual currency, namely network security regulation. The act of protection of consumers, and encourage the development of the virtual currency to restrain illegal interests of the three aspects to consider, based on the complete content, worthy of our reference.

Key word

Carbon emissions; guarantee; mortgage financing;

Since 2009 the Cong created bitcoin, this new term overnight swept the world, over the past 7 years now, bitcoin heat unabated, and the national legal bitcoin very different attitudes [1]: Russia, Thailand completely prohibit the use of bitcoin, China prohibit financial institutions and Payment institutions to carry out bitcoin business. Only bitcoin treated as a specific commodity, positive meaning of the United States and Canada, Germany, France, Japan, Singapore and other countries have recognized the development of bitcoin, and is developing the Regulatory Act to regulate bitcoin industry.

In June 2015, New York Financial Services Bureau announced the referred to as “bitcoin licence” “virtual currency regulation act” (hereinafter referred to as the “act”), it was incorporated into the “New York Financial Services Bureau laws and regulations” in section 200th, the name “virtual currency bill”. “Bill” virtual currency for commercial activities is the main means of supervision in advance of the regular assessment of the administrative licensing and afterwards. It is the first specifically for virtual currency tailored to the regulatory rules of the United States, its influence to American and even the whole world is no trivial matter. This article through the scope of rationality and supervision contents of the bill introduced the background and basis of the bill, and to explore the regulatory logic of virtual currency, and puts forward relevant suggestions to China’s virtual currency regulation.

A bill, the introduction of the background and basis

(a) the legislative background

“Bill” issued after two years: in August 2013, New York Financial Services Bureau issued a notice, declare to carry out investigation and argumentation, consulted on the best way of virtual currency supervision; in January 2014, New York held a large-scale hearing, discuss the virtual currency supervision plan; in July 2014 introduced the first draft in December 2014; the release of the second draft; according to the feedback, modify the community in June 3, 2015, the final version of the New York “virtual currency regulation act” officially published. [2]

Benjamin is responsible for the New York Financial Services Authority? Routh base (BenjaminM.Lawsky) in the initial consultation statement and subsequent multiple speech are explained in the promulgation of “act” the reason. He said virtual currency caused by the New York Financial Services Authority’s attention in 2013, we see the benefits of virtual currency, including promoting global payment system, reduce the transfer rates, to avoid disclosing fraud and theft, credit card information caused by traditional financial institutions to promote innovation and reform, the virtual currency for both the interests of consumers or the entire financial industry is very useful. In addition, they also pay attention to the problems of virtual currency: money laundering, tax evasion, drug trafficking and other illegal activities in the bitcoin virtual currency such as the help of more convenient, virtual currency has become instruments of crime. [3]

Routh repeatedly stressed that New York’s Department of financial services regulatory purpose is to balance the interests of the three aspects: the first is to protect the interests of consumers; the second aspect is the suppression of illegal activities on the use of virtual currency; the third is the emerging industry of virtual currency to encourage and foster. These three kinds of balance of interests is the starting point of the financial services regulatory bureau of the state of New York, after two years of demonstration, has always revolved around how to realize the maximization of the interests of three parties. [4] visible, “act” the introduction of the background based on the innovation and development of the virtual currency should encourage industry, protect the consumer convenience, but also avoid the basis of virtual currency become instruments of crime, and not at some point to prohibit the development of the virtual currency at.

(two) regulatory basis: money transfer method

The virtual currency will bring legal risks which is not enough to become the New York state financial service can introduce the supervision of administrative licensing basis. The administrative license is a means of supervision control of market access, the rights and freedoms of the market imposed severe restrictions must be set in a clear legal basis, the legal requirements of the principle of administrative license. As Routh has repeatedly stressed that the [5] base, New York Financial Services Bureau issued the “act” is based on the very important American monetary transfer method. [6] money transfer behavior has been the subject of the administrative licensing mode of supervision in the United States, the transfer of money only to obtain a license to engage in currency transfer behavior. After the emergence of virtual currency, virtual currency, mass transfer behavior accompanied, engage in virtual currency transfer behavior should also receive a license issued by the state. Therefore, the power of administrative license of the state of New York issued the “act” on the basis of the money transfer method given, but is only for virtual currency transfer behavior.

The basic 1. money transfer method

The whole meaning of money transfer method is composed of two levels of federal law and state law, the federal law is mainly responsible for the registration and the relevant anti money laundering regulations and money transfer, while the state law is the legal basis for the transfer of money issued license, federal law prohibits the transfer of money did not obtain state issued currency transfer licence in the money transfer behavior. [7]

Generally speaking, money transfer service generally refers to the sale or distribution of payment instruments, or prepaid card to provide transfer services for the purpose of currency or monetary value, which is to provide the transfer for the purpose of acceptance is the monetary value of the unit has become the core of the state money transfer service definition or money. [8] to the core definition, bitcoin exchange, bitcoin payment company certainly engaged in money transfer service.

The original currency transfer legal system applicable to non financial institutions to provide travel service or service check draft, these institutions accept customers to pay money to the customer, and issue traveler’s checks or drafts, the payee or their clients can hold a check or money order to service outlets to extract relevant funds. At the end of 1990s, the mall issued prepaid cards are also included in the scope of the money transfer service to. Therefore, the bill service and stored value card service is the legislators imagination in the legislation at the beginning of the template. [9]

2. federal money transfer method

Federal law in the transfer of money to a behavior called “money services” (MoneyServicesBusinesses, MS-Bs) concept. The MSBs includes 6 kinds of situations, one is the money transfer service provider (MoneyTransmitters). The main provisions of the MSBs in 1970 of the “bank secrecy law” (BankSecrecyAct, BSA). BSA is the first anti money laundering legislation, Congress authorized the treasury as BSA’s law enforcement department, the Ministry of finance has designated the subordinates of the Financial Crimes Enforcement Network (FinancialCrimesEnforcementNetwork, FinCEN) as the implementation of sector specific. According to the provisions of BSA, MSBs is the anti money laundering obligations, all must be registered in FinCEN MSBs. [10] therefore, at the federal level, the money transfer behavior by FinCEN regulation, regulation is based on BSA, means of supervision is required to register the regulatory focus on performing the obligation of anti money laundering.

3., money transfer method

The federal level requirements of MSBs to FinCEN and has the actual registration license issued power are not contradictory. The registration and administrative license registration, almost no substantive review restrictions on FinCEN; and the state license after the substantive review long, for the money transfer business conditions of administrative licensing provisions is the key whether in the money transfer business.

In mid twentieth Century, the state issued a few money transfer services, mainly to prevent the transfer of money service business moral risk or bankruptcy situation can not be cashed in to accept consumer payment currency, which makes money transfer service method is regarded as a “safe and sound” (SafetyandSoundnessLaws). [11] now, 48 states and the District of Columbia have made the money transfer service, each state of the money transfer service behavior to define different conditions of administrative license set is not the same. This situation has also led to many American scholars called for the establishment of a unified national money transfer service, reduce the cost of legal retrieval money transfer service providers. [12]

(three) different regulatory approach to virtual currency

Federal and state regulators to determine the virtual currency transfer service providers should also be regulated, however for the virtual currency transfer behavior should be how to regulate there are two different options: the federal and state opted for the interpretation of the law, will the virtual currency into the traditional money transfer service, and the state of New York the introduction of the regulation specifically for virtual currency bill, but the basis is still the traditional money transfer method.

1. federal regulation on virtual currency

In March 18, 2013, FinCEN issued guidelines clearly pointed out, not because of the virtual currency is not real money, the body can escape the money transfer service law supervision. Related to the subject of virtual currency guidelines will be divided into three categories: the first category is the virtual currency users (Users), including the use of virtual currency payment and consumers receive virtual currency as a means of payment business; second is the virtual currency control (Administrators), refers to the distribution center of virtual currency issuer and managers; the third category is the exchange (Exchangers), for example, that accept bitcoin bitcoin exchange then convert into currency service providers. FinCEN provides only second and third kind of main body belongs to the money transfer services, shall be registered.

In January 30, 2014, FinCEN issued management rules, emphasis on money transfer service is any method from where a subject receives money, funds or other alternative value units and transferred to another place or another subject behavior, the definition includes all service providers of virtual currency transfer.

2. state regulation of virtual currency

Most states follow the federal regulatory ideas, that the use of the traditional money transfer law can, such as Texas and Kansas, the regulatory approach is similar to FinCEN, they claim that the virtual currency can issue guidelines for falling mature currency transfer law supervision scope, does not need specially formulated virtual currency regulation bill.

New York is deemed necessary based on the traditional money transfer method on the introduction of regulatory specifically for virtual currency bill, then California, North Carolina, it also reflects the state of New York to follow in Italy, they also developed specifically for the regulation of virtual currency bill, is currently awaiting the legislature by. [13]

3. New York specially formulated virtual currency regulation act

New York Financial Services Bureau Routh after the entry into force of the act of speech: the Department also has a lot of colleagues think that the application of existing money transfer method can, because FinCEN and other state supervision demonstration, the traditional money transfer method is a robust not wrong way. However, Lawski believes that regulators need to take the initiative to jump out of the comfort zone, really assume regulatory responsibilities.

First of all, how the future development trend of the virtual currency, who also can not predict, but at least now has a large market demand, there is related to the interests of consumers, also produced a lot of legal risk, and because of the virtual currency service providers engaged in traditionally regulated money transfer business, therefore, we should first make clear the need the virtual currency transfer behavior regulation attitude. [14]

Secondly, New York’s currency transfer method is established after the civil war. In the legislative background of the time, the mass media are rarely used, not to mention the Internet generation, therefore, when lawmakers consider the money transfer service providers are commercial entities, and today’s virtual currency can not be included in any one of the traditional financial sector, not in andlawmakers hypothesis. Responsible regulators should not allow such a regulatory framework for a new product beyond lawmakers are expected to be included in the old currency transfer method, otherwise the lag of legislation will greatly hinder innovation.

Finally, according to the regulation of virtual currency legislation has many benefits: more safety standards are formulated according to the characteristics of the virtual currency to build the trust of consumers, to protect the interests of consumers; more conducive to combat related virtual currency crime, illegal punishment more targeted; more conducive to improving the virtual currency for investor confidence in emerging industries the heat is very important to maintain long-term investment. [15]

Therefore, in the money transfer behavior has been the subject of state administrative license regulatory tradition, transfer behavior of virtual currency also should be subject to supervision of the administrative license, the state of New York based on the above reasons, decided to set up a special licence of virtual currency, the currency transfer for more targeted regulation, so the introduction of this department “bill”.

Two, the scope of “act”

The provisions of the “first act”, the bill is about “virtual currency business regulation”, therefore, the scope of application of the “act” is the “virtual currency business activities”. According to the traditional currency transfer law, the scope of application of the “act” provisions in fact belong to the traditional money transfer behavior, essentially the same in accordance with the FinCEN guidelines, the two will be a virtual currency “user” out of the outside supervision.

(a) the definition of virtual currency

The definition of “act” article second of “virtual currency”:

Virtual currency is any as a medium of exchange or as a stored value of digital virtual currency unit, should be interpreted as generalized trading units, including: (I) a centralized storage and management; (II) to the center, no centralized storage and management; (III) by computer or manual create and get. Virtual currencies do not include the following:

(1) the following: digital unit (I) using only online gaming platform; (II) no market or application in the game platform; (III) can not be exchanged or redeemed currency or virtual currency; (IV) can not change the real world of goods, services, discounts or purchasing power.

(2) as a means to attract consumers and incentives in the digital unit issuers or designated businesses where exchange goods and services, discounts or purchasing power, but not the legal currency or virtual currency exchange.

(3) as part of the digital prepaid card unit used.

Can be seen from the above provisions, “the definition of virtual currency act” includes three parts: the first part is the definition of the general connotation, essence of virtual currency is a digital transaction unit; the second part is the classification of the front, according to whether there is distribution center as well as through artificial or computer generated the two standards classification; the third part is the reverse, the online game currency, businesses issued all kinds of coupons and prepaid cards out of the definition of virtual currency abroad. But this definition is not clearly distinguish the legal tender of virtual currency and electronic form.

(two) the definition of virtual currency business activities

“Bill” is also defined in second part of the definition of a “virtual currency business”, these actions are essentially a money transfer behavior. Virtual currency business refers to any one of the following activities involving New York or New York residents:

(1) for the transfer or transfer and receive virtual currency, unless such behavior for Nonprofit purposes, and no more than a nominal value of bitcoin transfer;

(2) for others to hold, storage, custody or control of virtual currency;

(3) as a business selling virtual currency;

(4) as a customer service to implement the virtual currency trading exchange service;

(5) control, management or virtual currency issue.

The development and dissemination of virtual currency’s software does not belong to the virtual currency business activities.

Bitcoin as an example, from the distribution chain bitcoin, bitcoin service by “bill” supervision act mainly specializing in bitcoin storage, transfer, exchange, payment and other sectors, because bitcoin to the center of the issue, there is no issue of specialized institutions, “act” on the issue of regulatory behavior do not apply to the field of bitcoin. From the bitcoin ecosystem, bitcoin exchange business is the exchange bitcoin, bitcoin payment company with and accept the transfer characteristics of bitcoin, bitcoin wallet company provides storage service, they are engaged in the business are defined in the act of virtual currency business activities.

(three) licence exemption

“Act” provisions of the exemption license in third.

The subject can implement the license exemption:

(1) according to the main body of the New York commercial bank law license and by the New York Financial Services Authority approved in virtual currency business activities;

(2) only the use of virtual currency for the purchase or sale of goods or services, or only for the purpose of investment businesses and consumers.

According to the two exemption regulations, commercial banks and other banking financial institutions only after the license exemption approval of the New York financial services authority can enjoy the virtual currency; and only the use of virtual currency as a means of payment or investment means consumers and businesses do not need to apply for a licence would be free to use virtual currency, which complies with the provisions of the FinCEN guidelines. With the transfer of money by the same logic.

Analysis of the reasons that consumers and businesses will be virtual currency as payment and investment means when it faces the risk of price fluctuations only virtual currency losses may bring the risk, as a means of payment can be agreed upon by the parties in advance, as an investment is nothing more than investment risk problem, does not affect the public interest. However, the virtual currency exchange listed business activities in the custody of such behavior is different, the amount of scale, the number of participants, the risk can not be compared with the complex completely exempt behavior, if any, are directly related to the development of public interests and the entire virtual currency industry, so its urgent need supervision why, this is the general transfer of money by the state regulatory behavior.

Three, “bill” regulatory focus

The purpose of the traditional money transfer method is the main consumer rights protection and anti money laundering, and according to the network security risks of virtual currency specific, but also the need for network security supervision, special “bill” therefore, the focus of supervision including anti money laundering, network security and consumer protection of these three aspects.

(a) anti money laundering

“The provisions of the 1. act”

“Act” provisions of article fifteenth of the anti money laundering provisions, provisions of article twelfth of the registration and record with the relevant anti money laundering.

(1) anti money laundering provisions. “Bill” Fifteenth is related to special provisions of anti money laundering. First of all, it stipulates the licensee must establish a money laundering scheme, including internal control system, to provide independent and impartial compliance testing, designated daily anti money laundering compliance officer, provide ongoing anti money laundering training and the approval of the board of directors of the anti money laundering policy. Secondly, the Licensee shall record the identity, address, transaction amount, payment method, and the end of the date of the transaction initiated, every day more than $10 thousand of transactions should be reported, shall also monitor whether the customer has illegal activities, the suspicious circumstances to report to the New York Financial Services Bureau immediately. Finally, the licensee needs to identify the identity of the customer, verify the name, address, check whether or not in the criminal system of federal list, according to the high risk, large or suspicious accounts due diligence standards will be improved.

(2) the registration and record clause. “Bill” is the twelfth registration and record the terms according to whether the transaction completed made different provisions. The completed transaction shall be kept for at least 7 years of the original registration and records, including each transaction amount, date, time and specific payment instructions, the total cost of receipts and payments, name, account number, transaction address, including assets and liabilities, owners’ equity revenue and expenditure of the general ledger, bank statement or Zhang, sent to the parties or consumer evaluation and statements, records and the board of directors meeting time, proving compliance records, investigation of customer complaints and solve the communication records and other trading errors. Unfinished or idle virtual currency account transaction records shall be maintained for at least 5 years.

2. “bill” on the rationality of anti money laundering supervision

“Act” on the anti money laundering supervision is mainly reflected in the recognition of the identity of customers, keep transaction records, large and suspicious transactions, the establishment of internal control system of anti money laundering, the currency of the anti money laundering means the same act means that the virtual currency into the common anti money laundering supervision. Bitcoin for example, “act” the basic effective anti money laundering supervision.

(1) over to the center. The scope of application of the “bill” for bitcoin is the major trading platform, payment, etc. bitcoin intermediary service agencies. Although bitcoin is to the center of the issue, but the miners are too difficult, the cost is too high; the probability of transactions between acquaintances also have bitcoin is also very small, so the majority of people, mainly through the bitcoin trading platform to complete the conversion of cash and coins. Bitcoin trading platform intermediary has a large number of bitcoin transactions, so that it can be regarded as a center of bitcoin transactions. Compared to the transaction between the fragmented regulatory bitcoin private users, the difficulty of monitoring the smaller bitcoin trading platform, bitcoin trading platform into the main scope of the obligation of anti money laundering has higher.

(2) overcome anonymity. Anonymity of bitcoin bitcoin is the most prominent feature of the convenience of money laundering, “act” provisions of customer identification makes bitcoin users cannot hide behind a string of key characters, not deliberately using more than one address trade secret, and even if it tries to use the account of others to avoid regulation, at least to pay the cost of money laundering.

“Act” provisions of the registration and recording of transactions, the regulatory bitcoin transaction exposure fixation and pursuit in the trading platform and other institutions, the registration and record of money laundering itself will cause deterrence, take the success probability and consequences of illegal money laundering, and registration and records also provided that after the investigation of suspicious activities, basic data analysis.

“Bill” provides large and suspicious transactions reporting and verification, which can increase the sensitivity of bitcoin trading platform for money laundering, in not accurately determine which transaction is money laundering transactions, such a system can weaken the hand money laundering motivation, improve the cost of money laundering, on the other hand help timely detection of money laundering, not any of its growth period, large-scale development of money laundering.

Finally, “the establishment of internal control system of anti money laundering act” provisions of the same basic rules of conventional anti money laundering regulation, commercial banks have a set of internal control system of anti money laundering and anti money laundering is responsible for specialized training, often carry out anti money laundering. Therefore, “act” and not because of the virtual currency is a new development of things deregulation, but in the construction of the internal mechanism will also be related to the subject of bitcoin trading platform in accordance with the commercial bank and other conventional subject to anti money laundering requirements, which is conducive to the development of bitcoin virtual currency such as the industry standard of health.

(two) network security

1. “bill” provisions

Network security is a risk since bitcoin produced has always been questioned, “act” for network security supervision focused on two terms, one is the network security provisions of the special one is related to network security and business continuity and disaster recovery clause.

(1) the terms of network security. “Act” provisions of article sixteenth of the specialized network security solutions. “Bill” require the licensee to establish a set of effective network security solutions, and includes five major functions: to confirm the internal and external network risk, at least to identify their information in the system such as how to obtain sensitive information will be who protection of electronic and information system; interference detection system; intrusion, data destruction and other events; the measures taken in response to unexpected events; recovery and restart.

The licensee should establish an internal network security policy framework, every year at least once approved by the board of directors, which shall include information security, data classification, control, business continuity and disaster recovery preparation, implementation and system capacity, operation and relevant feasibility, system and network security, system, development, application quality assurance, core protocol of physical security and environmental control, customer data privacy, the seller supervision, emergency response, detection is not directly controlled by changes. In addition, “bill” also provides the report and audit system, and the information security requirements specified qualified personnel, responsible for hiring enough employees to manage network security, regular training, update etc..

(2) continued operation and disaster recovery clause. “Bill” is the seventeenth provisions of sustainable management and disaster recovery terms, it requires the licensee to develop a contingency plan in advance. Although the disaster recovery is not limited to network security, may also include natural disasters, but the network security attack situations also belong to this article. Plan should include: confirmation of responsibility documents, data, infrastructure, personnel exchanges, and basic personnel in the disaster plan, program maintenance support system backup program, to confirm the necessity of the third party, etc.. This scheme can not only save the Licensee’s website, need to send it to relevant staff to provide offline preservation, and implementation of training, the feasibility of the scheme of testing professionals every year, the event of an emergency should promptly notify the competent department.

Analysis of network security regulation 2. “bill”

For the promotion of the virtual currency, so that the public trust is crucial safety storage and trading environment. Virtual currency is different from the notes, no physical form, all transactions through the Internet, the so-called stored on the Internet, so the property safety depends largely on how to ensure network security, network security has become the focus of supervision.

“Act” provisions of the five major functions of the network security system covering a comprehensive, theory can effectively deal with all kinds of hacker attacks, and even if the accident occurred attacks, accidents will respond to advance the development of the program, and can restart and recovery. Sustainable management and disaster recovery requirements of clause is pointing directly after the accident situation to provide solutions. The provisions of internal network security policy system is very complete, forcing every detail of the licensee cannot ignore the network security, the need for self inspection every year, which greatly improves the ability of the overall system security and network system to resist the attacks.

The report of audit system, and the person responsible for the provisions, professional staff is to implement the scheme of the network security and network security policy. The Licensee’s own reporting system is a process of self inspection, improve the audit system, regularly check external, plus the bill and a specific assessment in terms of composite inspection to ensure basic plan implementation. Responsible for network security regulations, specialized staff and regular training system, the network security personnel security implementation. “Network Security Act” vulnerable to cyber attack based on virtual currency assumptions, and established a set of theories and effective implementation of the supervision system for various aspects of network security.

(three) consumer protection

1. “bill” provisions

(1) consumer protection provisions. “Bill” is the nineteenth consumer protection provisions, it defines the essence of risk disclosure, including virtual currency is not legal tender means, without government support, credit trading is not reversible, unpredictable price movements, legislative changes may affect the virtual currency; the general terms of disclosure, such as a variety of rights, obligations and responsibilities of consumers the terms of the transaction; the disclosure, such as transaction amount, transaction cost, virtual currency transactions and the type of nature; provide transaction receipts to consumers; established anti fraud policy, including the identification of fraud risk assessment, prevention and control program, identified the allocation of risk, liability risk assessment procedures and the detection of short-term anti fraud the repair procedure, control and monitoring system.

(2) report and financial disclosure provisions. “Act” provisions of article fourteenth of the report and financial disclosure provisions, the provisions require the licensee to submit quarterly financial report, submit the annual financial audit report, change of exchange method of criminal acts, and the announcement of company and the main staff of the notice bitcoin and legal tender, submit report violations.

(3) advertising and marketing terms. “Act” provisions of article eighteenth of the Licensee’s advertising and marketing, “act” requirements of the Licensee’s advertising must be that he has obtained licenses; at least the publicity and marketing materials in more than seven years, including print, Internet media, television and all marketing means; to meet all disclosure requirements, not misleading, concealed or missed.

(4) the customer asset protection and custody provisions. “Act” provisions of article ninth of the custody and protection of client assets, all Licensee shall establish a USD guaranteed debt or trust accounts to keep customer funds, trust accounts must be qualified by the trustee; others permit storage, possession or custody, keep control of virtual currency, should also for the same type and number of virtual currency; prohibit licensee without the consent of the client will sell, transfer, distribution and use of customer assets, unless authorized by the customer.

Analysis of the consumer protection act of 2..

(1) disclosure. Aiming at the risk of information asymmetry, “bill” made a lot of disclosure rules. Disclosed to the consumer to the virtual currency requirements is the essence to prevent consumers do not understand the virtual currency risk under the condition of non rational trade, therefore, “act” requirements of the licensee disclosed to the consumer legal status of virtual currency, clear they are not legal tender means, no government credit support, accounts and assets from insurance group the protection of state and federal legislation, and even change of the world may lead to the use of virtual currency is affected. In addition, also need to disclose the virtual currency trading losses that may arise, including cheating or accidental trading losses; market acceptance of virtual currency in changing the price fluctuation of the virtual currency and unpredictability may lead to a significant loss in a short time; virtual currency may be fraud or the risks of loss of network attacks.

“Bill” require the licensee to carry out regular detailed financial disclosure, so that consumers can understand their choice of trading platform or to pay the company’s current financial situation, to assess the safety of their own funds on the basis of financial data, and on this basis can be free to choose whether to replace the service provider.

“Bill” require the licensee to disclosure of consumer rights and related matters, in advertising and marketing will be carried out comprehensively and objectively disclose, such as consumers have to stop payment rights and get receipt right, know the licensee to change the rules of rights, such as the licensee will disclose consumer account information to third parties the situation. These disclosures are clear in their own right boundary is the most simple way for consumers, it does not need to refer to “act” or consult a lawyer, knowing right, consumers can realize tort and how to safeguard their rights.

(2) the protection of clients’ assets. “Customer Asset Protection Act” there are three main contents: the first is a separate account keeping, if it is in the form of a trust must also be managed by professional trustee; second is to keep the virtual currency for customers, store the same number and type of virtual currency is third; in the case of unauthorized clients cannot use capital.

A separate account is the basic method to keep the customer assets and the licensee to distinguish the assets. For the same number and type of virtual currency equivalent to 100% of the risk reserve provision, can prevent the risk of liquidity risk of the licensee appear rupture of funds. Without authorization can not use customer funds is the basic criterion, “act” expressly provides that such behavior is prohibited, behavior event, consumer complaints and prosecutions have a legal basis.

Four, relevant suggestions on China

In December 5, 2013, the people’s Bank and other five ministries jointly issued the “notice on guard against the risk of bitcoin” (hereinafter referred to as the “notice”), this is the only regulatory documents in China bitcoin. “Notice” denied bitcoin currency, bitcoin is clear “virtual goods” specific; bitcoin and financial institutions completely separated; for bitcoin trading platform filed in the telecommunications regulatory agencies; put forward to prevent bitcoin money laundering; stressed the need of public education on knowledge of monetary and investment risk prompt. “There is a certain significance notice” issued, but for the legal risk prevention bitcoin is still insufficient, for example, the “notice” provisions from the central bank is more authority to consider other legal issues, bitcoin caused no responses; bitcoin is defined as virtual goods, did not answer if bitcoin belongs to the new property etc.. Therefore, in the face of the vigorous development of the bitcoin market, notice on one of the central bank “can not achieve perfect supervision.

In view of China’s special bitcoin “notice” simple, does not have the similar to the United States as well as the currency transfer method, the author suggests that our country can learn from New York’s “virtual currency regulation act”, from the following aspects: (1) establish perfect supervision for the virtual currency regulation; (2) definition of virtual currency and the scope of application; (3) the establishment of virtual currency anti money laundering supervision; (4) the establishment of network security regulation of virtual currency; (5) consumer protection regulation to establish virtual currency; (6) improve the relevant regulatory rules of foreign exchange and tax, the virtual currency regulation included.

In short, as the representative of bitcoin virtual currency in global payments, reducing remittance rates, weaken the risk of stolen information and promote the traditional financial innovation is of great significance to promote, but also brought a lot of convenience in the legal risk of money laundering, tax evasion, drug trafficking and other illegal and criminal activities, network security risks and consumer interests. China should improve to the regulation of virtual currency, should also balance the protection of consumers, suppression of illegal activities and the development of virtual currency industry to encourage these three aspects, the development space for the virtual currency in our country, legal norms, health, let the virtual currency for consumers really bring convenience to change the traditional financial institutions.


[1] Zhu Sijia, Cui Jianhua: “bitcoin regulatory system of the United States and the enlightenment”, “economic and technological cooperation set”, 2016 (1).

[2] New York’s Department of financial services:, March 9, 2016.

[3] New York’s Department of financial services:, March 9, 2016.

[4] New York’s Department of financial services:, March 9, 2016.

[5] Jiang Mingan, chief editor: “administrative procedure research”, 128th pages, Beijing, Peking University press, 2006.

[6] New York’s Department of financial services:, PDF, March 9, 2016.

[7] SeeJacobHamburger, Bitcoinvs.StateMoneyTransmissionLaw:ProtectingConsumersorHinderingInnovation JournalofLaw, Economics&Policy229 (2015), p.230.

[8] SeeJacobHamburger, Bitcoinvs.StateMoneyTransmissionLaw:ProtectingConsumersorHinderingInnovation JournalofLaw, Economics&Policy229 (2015), p.230.

[9] Xu Xiaorui: “the United States how to supervise third party payment institutions”, “Internet financial load and the law”, 2014 (8).

[10] “SeeKelseyL.Penrose, BankingonBitcoin:ApplyingAnti-MoneyLaunderingandMoneyTransmitterLaws”, NorthCarolinaBankingInstitute529 (2014), pp.530-532.

[11]SeeJacobHamburger, Bitcoinvs.StateMoneyTransmissionLaw:ProtectingConsumersorHinderingInnovation? JournalofLaw, Economics&Policy229 (2015), p.232.

[12]SeeKevinV.Tu, FromBikeMessengerstoAppStores:RegulatingtheNewCashlessWorld, AlabamaLawReview77 (2013), p.82.

[13] see March 7th 2008access.

[14] New York Financial Services Authority, source:, March 9, 2016.

[15], PDF, March 9, 2016.

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