Daily Archives: June 4, 2015

New York has become the first state in the US to lay down regulations and rules for the trade of virtual currency including Bitcoin.

The New York Department of Financial Services (DFS) released the new rules on Wednesday. Outlined by Benjamin M. Lawsky, Superintendent of Financial Services, the new regulations will affect traders which accept, sell or buy virtual currency.

The rules have been formed after a two-year long investigation into cryptocurrency. The "BitLicense" regulations (.PDF) contain consumer protection, anti-money laundering compliance and cybersecurity rules tailored for companies using virtual currency, including Bitcoin.

At the BITS Emerging Payments Forum in Washington, DC on Wednesday, Lawsky said digital currency highlights the dynamic nature of financial markets and technology, and the pace of change is only doing to accelerate in the years to come. As a result, "regulators need to be ready to meet that challenge."

"We have a responsibility to regulate new financial products in order to help protect consumers and root out illicit activity. That is the bread and butter job of a financial regulator," Lawsky said.

"However, by the same token, we should not react so harshly that we doom promising new technologies before they get out of the cradle."

Lawsky noted that attempts to ban Bitcoin would likely fail, as banning computer code is nigh-on impossible. Instead, the financial regulator said the key is balancing the protection of consumers, the reduction of fraud and still permitting innovation breathing space.

If companies use virtual currency and are holding on to customer funds, they need to apply for a license. However, app developers who are developing software do not need to -- as the department will not need to act as a financial intermediary. Lawsky commented:

In addition, companies will need the approval of the financial regulator if they make substantial changes to their business models or products, as well as the inclusion of new controlling investors. However, they will not need permission before seeking funding through investment rounds or small software updates.

See the original post here:
New York finalizes Bitcoin trading rules | ZDNet

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The National Security Agency knows Edward Snowden disclosed many of its innermost secrets when he revealed how aggressive its surveillance tactics are. What it doesnt know is just how much information the whistleblower took with him when he left.

For all of its ability to track our telecommunications, the NSA seemingly has little clueexactly what documents, or even how many documents, Snowden gave to the media.Like most large organizations, the NSA had tools in place to track who accessed what data and when. But Snowden, a system administrator, apparently was able to cover his tracks by deleting or modifying the log files that tracked that access.

An Estonian company called Guardtimesays it has a solution to that: using the same ideas that underpin the digital currency Bitcoin, the company says it can ensure no one can alter digital files, not even an organizationsmost senior executives or IT managers. The idea is to stop the next Snowden in his tracks by making it impossible to tamper with data, such as the NSA log files, in secret.

To prevent people from spending a single bitcoin twice, all transactions are recorded in a global, distributed ledger called the blockchain. All copies of the bitcoin client software include a copy of the blockchain, and falsifying the ledger would require controlling at least half of all the copies in existence.

Guardtimes Black Lantern uses the same idea applied to any chunk of data, such as an access log file or the data gathered by Internet of Things sensors. The blockchain could then be distributed to every executive, or even every employee, to ensure no one person can alter it. It doesnt encrypt the data, but it can let you know if someone has tampered with it.

Had the NSA been using Black Lantern, the agency would have been able to detect Snowdens activities early on, or at least would have much better idea of what Snowden took, says Guardtime CTO Matt Johnson, a former agent with the Air Force Office of Special Investigations agent and defense contractor.

It keeps honest people honest, he says. It makes it impossible for them to lie.

Theres irony in a former federal law enforcement officerpitching a bitcoin-style decentralized cryptography system as a way ofsecuring the NSAs data. Bitcoin proponents praise the blockchain as a way for citizens to hide their online tracks from the government; but Guardtime shows how the same technology could be used as a tool for surveillance.

Continue reading here:
How the Tech Behind Bitcoin Could Stop the Next Snowden