When Ben Lawsky and the NYDFS met with key players in the Bitcoin community earlier this year, there were many questions of what the committee would propose and how it would affect Bitcoin entrepreneurs, businesses and the future of the digital currency industry. For nearly everyone in the Bitcoin ecosystem, the proposed BitLicense struck a nerve. It is a hot button issue including how the proposed rules and regulations will be debilitating to the digital currency industry, how a BitLicense will stifle continued innovation and mainly, the extremely short period which the NYDFS is giving to comment on the proposal.
In a recent Coin Congress press release, President of the Digital Chamber Perianne Boring stated regarding the short comment period, “One egregious aspect is that the NYDFS is only giving 45 days to comment, which is severely inadequate to proposed regulations of this scope.” Because of this short period, there are a great many within the Bitcoin community, including Coin Congress, that are calling on the community to submit comments to the NYDFS. Initially, Lawsky made claims that the proposed regulations would be intended to act as guardrails to protect consumers and root out illegal activities without stifling innovation. However, organizations like Coin Congress, the Digital Chamber and many others believe the BitLicense will in fact do the opposite, potentially crushing the Bitcoin industry in New York and stifling jobs, investments and innovation. Now, with less than 40 days to comment, the Bitcoin community needs to provide the committee with needed insight. Instructions on how to comment can be found here.
What is included in the proposal?
The NYDFS proposal would require a “BitLicense” for any firm engaged in receiving or transmitting virtual currency on behalf of consumers; securing, storing, or maintaining custody or control of virtual currency on behalf of customers; performing retail conversion services; buying and selling virtual currency as a customer business; or controlling, administering, or issuing a virtual currency.
Holders of a BitLicense would be required to adhere to a set of rules and regulations meant to prevent illegal activities and protect virtual currency customers. However, these proposed regulations, a word that the Bitcoin community often cringes at, will likely have adverse affects on continued innovation in the industry if the requirements remain the same. A detailed breakdown of the requirements proposed by the NYDFS contain a long list of actions that will be overseen by the NYDFS, including anti-money laundering, consumer protection, cyber security, capital requirements and financial reporting and audits. Yes, these are very important aspects of any business in the industry, but they can easily be controlled internally.
Petition to the state
Members of the Open Source Financial Developers Association (OSFDA) have begun a petition to the Governor and State legislature to bring attention to the overreach of the proposed BitLicense. The organization believes the rules and regulations put forth by the NYDFS will have drastically negative effects on businesses and communities in the industry, as well as blockchain-based technologies.
The petition was introduced because comments made by the community to the NYDFS are failing to address the Governor, who is responsible for appointing the superintendent of the NYDFS. The organization stated, “This BitLicense, if enacted, would serve as a permanent reminder in subsequent elections of those who opposed small business innovation in New York.” The petition can be found on Change.org at http://chn.ge/1o4sot7.
It is obvious that many individuals in digital currency communities believe that the proposed rules in New York will greatly affect the future of the industry. The hope is that the NYDFS will be open-minded, listen to the voices of the community and allow businesses in the industry to flourish.