NEW YORK (MarketWatch) -- The New York State Department of Financial Services said Tuesday it would begin considering proposals and applications for the establishment of New York-based virtual currency exchanges, opening the door to the regulation of such exchanges. The announcement came on the heels of an investor alert on bitcoin from Finra Tuesday and the bankruptcy of the bitcoin trading exchange Mt. Gox in late February. "Firms may immediately submit formal proposals and applications to operate virtual currency exchanges in order to help expedite the process of putting in place greater oversight for this industry," the public order said. NYDFS said it would propose regulatory guidance on virtual currencies "no later than the end of the second quarter." Approved virtual-currency exchanges would have to follow that regulatory guidance. "Turning a blind eye and failing to put in place guardrails for virtual currency firms while consumers use that product is simply not a tenable strategy for regulators," said New York's Superintendent of Financial Services Benjamin Lawsky. "Our overarching goal is to balance creating appropriate regulatory protections without stifling beneficial innovation in the development of new payments platforms."