Freewheeling virtual currency bitcoin is about to get a babysitter.
Ben Lawsky, New York’s top financial watchdog, told a panel of high-profile tech investors on Tuesday that he’s moving full steam ahead with plans to regulate crypto currencies like bitcoin amid concerns that the cyber cash has become the money of choice for criminals.
Lawsky said he expects to propose a “regulatory framework” for the virtual currency this year, making New York the first state to impose rules on bitcoin transfers.
Lawsky has proposed issuing a BitLicense to entities that deal in bitcoin to ensure they will enforce anti-money-laundering rules, such as knowing their customers.
People can remain anonymous when spending or transferring bitcoin, which has made it attractive to criminals, experts have said. In October, the FBI shuttered Silk Road, an underground drug website that was fueled entirely by bitcoins.
On Tuesday, some of Lawsky’s well-heeled panelists rejected the notion that more regulation is needed.
At one point, Lawsky stopped to remind the panel that it’s not a matter of ‘if” they will be regulated, it’s a matter of how much.
“It’s not worth it for society to allow money laundering .. to persist to permit a thousand flowers to bloom on the innovation side,” Lawsky told the panel, including Cameron and Tyler Winklevoss of Facebook fame.
Given a choice between stopping money laundering and allowing for innovation, “We’re always going to choose squelching money laundering,” he said.