The state of New York has become one of the first jurisdictions ever to propose explicit licenses for companies who want to carry out business in Bitcoin. The proposal is dubbed the “BitLicense” and would require legal entities to keep records of the identities and real-world addresses of their clients in order to actively keep an eye out for unauthorized activity, and to always have in its possession the amount of cryptocurrency owed to its customers.

Some of the representatives of the Bitcoin community have long been waiting for the first step in turning cryptocurrency from an unregulated wild-west into a legitimate area of commerce. One of the Bitcoin trading exchanges admit that the BitLicense is an important asset that would allow them to provide US banking and regulatory protection to their target customer group.

On the other hand, the companies argue that the legal requirements are too restrictive, because the areas covered by the license are too broad and the new rules wouldn’t even allow the creation of cryptocurrency in the first place.

The Bitcoin entrepreneur, who leaked the documents revealing trouble at Mt Gox exchange, argued that for some reason the license covered companies that had little to do with the financial industry – for instance, wallets like Blockchain.info, tipping applications like Changetip, and mixing services like CoinJoin. The entrepreneur points out that the inclusion of non-hosted wallets is particularly troubling, because it outlaws the personal possession of Bitcoins for those users.

Given that license holders are obliged to monitor their users for unauthorized activities, businesses selling Bitcoin wallets they don’t host find themselves in an impossible position: their product can’t be legally sold without a license, but they have no way to monitor their clients to comply with the terms of the license. The requirement that any party controlling, administering or issuing a virtual currency requires a license is also criticized by the community, because it would have outlawed the original Bitcoin invention.

However, the suggested measures are now in draft form and still liable to change. So, any interested party has 45 days to comment on the proposal – the consultation began on 23 July.