Lawsky: Mt. Gox proves need for ‘tailored’ Bitcoin regs

Ben Lawsky. (Office of the Governor of New York)
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Ben Lawsky, the state's top financial regulator, said today that the meltdown of the Mt. Gox Bitcoin exchange illustrates the need for greater regulation of the virtual currency.

The Mt. Gox exchange, based in Japan, went dark overnight and was said to be on the verge of bankruptcy, after it was discovered that hundreds of thousands of Bitcoins had disappeared from the exhange in a previously unnoticed theft.

"While all the facts surrounding the situation at Mt. Gox in Japan are not yet clear, these developments underscore that smart, tailored regulation could play an important role in protecting consumers and the security of the money that they entrust to virtual currency firms,” said Lawsky, in a statement to Capital.

Lawsky, who heads the state’s hybrid insurance and banking regulatory agency, is planning to make New York the first state to outline rules governing the new world of digital currency. Lawsky has said regulations will help stabilize Bitcoin exchanges, and could help prevent rapid fluctuations in value like those that happened on Tuesday, when news of the Mt. Gox shutdown caused Bitcoin values to drop by 23 percent overnight.

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The trading company Second Market is reportedly planning to open a New York-based Bitcoin exchange, though it's unclear how the collapse of Mt. Gox, and any potential regulations imposed by Lawsky, might affect those plans.