New York State Clamps Down on Bitcoin: Are the Good Times Over?

Well whenever regulators get their hands on something you can pretty much back up the truck because they will regulate it to death.

Benjamin Lawsky, superintendent of New York's Department of Financial Services, expects to adopt consumer disclosure rules, capital requirements and a framework for permissible investments with consumer money.

"Our objective is to provide appropriate guard rails to protect consumers and root out money laundering without stifling beneficial innovation," Lawsky said in a speech at the New America Foundation in Washington.

Lawsky said last month that his agency plans to issue rules for businesses handling virtual currencies, including a "BitLicense", which could make New York the first U.S. state to regulate virtual currencies such as bitcoins.

In other words Wall Street types want to get in on Bitcoin trading but they cannot when Mt. Gox and Slovenia-based Bitstamp (now that sounds shady if I ever heard of it) are controlling trade in it. This would be interesting to see how the value changes after this. My guess is it will drop as fees and automated trading take a bite out of actual supply and demand metrics. Oh well it was an interesting experiment.