Popularity just isn't easy. That's something cryptocurrencies, like Bitcoin, are starting to grasp. Yes, they're now being accepted as a formal method of payment by more and more places, but some government entities still can't figure out how to treat them properly, particularly in the US. Case in point: the state of New York, which is proposing that companies exchanging virtual currency with consumers go through a regulatory process. BitLicense, a plan that's been in the works for nearly a year, would require these cryptocurrency banks to verify the identity of customers and, in some cases, ask for more information from "high-risk customers, high-volume accounts, or accounts on which a suspicious activity report has been filed." But that's not necessarily a bad thing, not for everyone anyway. "These regulations include provisions to help safeguard customer assets, protect against cyber hacking, and prevent the abuse of virtual currencies for illegal activity, such as money laundering." Benjamin M. Lawsky, superintendent of New York's Department of Financial Services, stated in a press release about to the proposal.

Firms must, at a minimum, when opening accounts for customers, verify their identity, to the extent reasonable and practicable, maintain records of the information used to verify such identity, including name, physical address, and other identifying information, and check customers against the Specially Designated Nationals ("SDNs") list maintained by the U.S. Treasury Department's Office of Foreign Asset Control ("OFAC"). Enhanced due diligence may be required based on additional factors, such as for high-risk customers, high-volume accounts, or accounts on which a suspicious activity report has been filed. Firms are also subject to enhanced due diligence requirements for accounts involving foreign entities and a prohibition on accounts with foreign shell entities.

What's more, Lawsky took to Reddit to discuss the proposed framework. In the forum post, he used exchange firm Mt.Gox, which is currently facing liquidation, as an example of why cryptocurrency needs to be regulated, noting that it is important to keep consumers' assets protected. "In developing this regulatory framework, we have sought to strike an appropriate balance that helps protect consumers and root out illegal activity -- without stifling beneficial innovation," he wrote. Still, this is likely to make some people lose interest in virtual currencies, since privacy aspects are part of what make things like Bitcoin so popular among users. If passed, businesses doing transactions in the state of New York, regardless of where the customer lives, will need a BitLicense from the DFS, though that won't apply to "merchants or consumers that utilize Virtual Currency solely for the purchase or sale of goods or services." You can read the proposal in its entirety here.