**iNVEZZ.com, Tuesday 14 January:**



The New York State Department of Financial Services ( the DFS) is to hold a public hearing on the regulation of digital currencies on the 28th and 29th of this month in New York City.

Following the first-ever Congressional hearings on bitcoin and its ilk in November, the DFS quickly came up with the idea of having its own inquiry. In announcing the initiative later that month, the agency wrote: “Our public hearing will review the interconnection between money transmission regulations and virtual currencies. Additionally, the hearing is also expected to consider the possibility and feasibility of NYDFS issuing a ‘BitLicense’ specific to virtual currency transactions and activities, which would include anti-money laundering and consumer protection requirements for licensed entities.”

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The DFS likes to go its own way, independently of federal agencies, and although the itemised issues aren’t any different from those before the US Senate, the New York financial regulator may dwell on two hot topics that concern every bitcoiner:



_How will e-currencies be taxed?_

The US Internal Revenue Service (IRS) should provide taxpayer clear and concise rules on how it will handle transactions with digital currencies, says National Taxpayer advocate Nina Olson, who lists bitcoin and its clones as one of the 25 most serious issues encountered by US taxpayers.



In Olson’s view: “The lack of clear answers to basic questions such as when and how taxpayers should report gains and losses on digital currency transactions probably encourages tax avoidance.”

_Is bitcoin a threat to the Fed?_

The Congressional report released to little fanfare last month suggests that bitcoin could pose a threat to US monetary policy and could impact on the ability of the Federal Reserve to meet its objectives of financial and price stability.

Says the report: “If greater use of bitcoin (and other crypto currencies) leads to multiple monetary units, these benefits could be threatened, particularly if these new currencies continue to exhibit a high degree of price volatility.”