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Lawsky proposes new Bitcoin rules

Beware the bitcoin.

Ben Lawsky, New York’s top financial sheriff, released new rules to take some of the Wild West out of the cyber currency.

But the proposal by the Department of Financial Services superintendent released on Thursday won’t protect the digital currency investors from malicious hackers looking to loot exchanges, according to one prominent bitcoin booster.

“They’re a huge target for people trying to hack financial institutions,” Jaron Lukasiewicz, chief executive officer of Coinsetter, a trading platform for the digital currency, told The Post.
“Bitcoin security is a very complicated thing.”

The proposed rules are the first step in companies obtaining a “BitLicense,” which would pave the way for a regulated exchange of the crypto-currency.

The DFS started looking into new bitcoin exchanges for New York after the Japanese digital currency exchange Mt. Gox imploded earlier this year, apparently from hackers stealing $460 million in investor funds.

The rules include anti-money laundering provisions that would include the identities and addresses of people trading the currency, as well as receipts for trades totaling more than $10,000 per day.

While the proposal is “pretty comprehensive,” Lukasiewicz said he would like more information about how to keep customer deposits and how to insure them.

“We want full clarification that we can hold customer deposits in a way that is reasonable, in a way that doesn’t carry outrageous capital requirements that are impossible to handle, and in general are unnecessary,” he said.

Last month, The Post reported that Nasdaq was discussing whether it should set up its own regulated bitcoin exchange.

“Seeing progress on this is really, really exciting,” Lukasiewicz said.