Bitcoin is moving closer to mainstream currency after the New York Department of Financial Services said it was finalizing new regulations governing the transmission of cryptocurrency, Fortune reported earlier this week.
The new legislation, dubbed BitLicense, will govern how cryptocurrency companies transmit money on behalf of their customers. The new regulations are a welcome sign for proponents of Bitcoin, who view cryptocurrency as a safer, more intuitive payment platform. However, supporters reined in their enthusiasm over concerns that Bitcoin may soon become over-regulated, thereby defeating the purpose of the cryptocurrency.
Somewhat surprisingly, New York would not be the first jurisdiction recognize Bitcoin. Last year Germany became the first country to formally recognize Bitcoin as a legitimate currency. Other countries have been much more critical of Bitcoin, with some of them outright banning the digital currency. Currently, Iceland, Bolivia, Ecuador, Kyrgyzstan and Vietnam have banned the use of cryptocurrency, according to Coindesk.com.
These countries, as well as regulators all over the world, are concerned about the criminal element associated with cryptocurrency. Because Bitcoin operates in a legal grey area, it’s difficult to effectively control. In an era where central banks are playing a more direct role in the economy and currency markets, Bitcoin represents a landmark shift in how consumers create and exchange value.
For traders, Bitcoin remains a highly volatile currency that is susceptible to very large price swings. For example, the value of the cryptocurrency plunged 15 percent after the US government seized Silk Road, a community on the deep web that was involved in the international drug trade.
The price of one Bitcoin peaked at USD $979.45 on November 23, 2013, according to Coindesk. Prices volatility has eased somewhat this year. Bitcoin traded at USD $227.82 on Saturday, down 1.3 percent.