The BitLicense Regulation Is Eight Months Old. One Has Been Granted to Date.
How red tape is hurting the cryptocurrency industry.
In June 2015, the New York State Department of Financial Services (NYDFS) established a new regulatory process for firms working in the cryptocurrency space. Applying for a so-called BitLicense involved submitting reams of paperwork, hiring expensive attorneys, and onerous reporting requirements. Critics said the process would put an enormous burden on small startups, and indeed many firms responded to the new regulation by announcing that they were no longer serving customers in the Empire State.
As CoinDesk reported this week, the fears of critics have been further realized:
The NYDFS has only issued one BitLicense under the regulatory framework, which it provided to bitcoin services firm Circle in September 2015.
According to figures provided to CoinDesk by the NYDFS, this means as many as 21 industry startups are now operating under the BitLicense's safe harbor provision, but waiting for a formal confirmation that they are licensed bitcoin services providers in New York.
Even some of the industry’s more well-funded applicants, such as bitcoin exchange Coinbase and bitcoin storage specialist Xapo, indicated that their applications are still being processed.
CoinDesk reached out to former NYDFS attorney Dana Syracuse, who defended the BitLicense on the grounds that "the process so far does not differ from traditional Money Service Business (MSB) licenses" and that firms waiting on approval can continue operating under the law’s safe harbor provision.
OK, but the process of applying for an MSB in New York State is also expensive, slow, and favors large politically connected firms over small startups. It has long hindered competition in the money transmission sector. If the BitLicense process "doesn't differ" that's an indictment of the new regulation right there.
Syracuse also doesn't acknowledge that cryptocurrency firms operating under the BitLicense’s safe harbor provision are still in limbo. What if their applications are turned down, or approved on the condition of some alteration of their business model? Raising venture capital is more difficult when your right to operate in one of the nation’s biggest markets isn't secure.
For more on the BitLicense, watch the video below:
Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.
-
Critics said the process would put an enormous burden on small startups, and indeed many firms responded to the new regulation by announcing that they were no longer serving customers in the Empire State.
Onerous burdens are what distinguish the truly advanced civilization from the savages.
-
These were all features, not bugs.
-
Exactly. The regulations are working exactly as planned.
-
Is one of the questions on the application:
What is you donation level to the Democrat Party
-
CoinDesk reached out to former NYDFS attorney Dana Syracuse, who defended the BitLicense on the grounds that "the process so far does not differ from traditional Money Service Business (MSB) licenses" and that firms waiting on approval can continue operating under the law’s safe harbor provision.
"Yes, this regulation is destructive, pointless, and encourages corruption, but we've had other regulations that were destructive, pointless, and encouraged corruption in the past, so stop complaining"
-
Judging by several recent jury verdicts, NY state government exists solely to encourage corruption with ruthless efficiency.
-
Innovation was celebrated, in this country, long ago. Now, it's punished.
-
EPA Putting Red Light on Amateur Car Racing: How red tape is hurting the cryptocurrency industry.
See there? You could have saved some time and effort and valuable internet space just by combining these two articles into one and admitting that the details don't really matter, it's the same damn story either way. Regulators gotta regulate.
-
""Its just a clarification of existing law!!? You have no right to complain!!!"
-
Reason.com should be just 1 single long blog post.
-
About Donald Trump.
-
"How Donald Trump will stop the mexicans from having marijuana fueled ass sex, and what do millennials think about it."
-
Wait this is better
What Uber driving millennials think about Trump's war on stoned mexican ass-sex.
What we saw at the 'Food Trucks for Abortions" rally.An excerpt from the new book by Reason writer Nick Ron Jesse 'Ed' Welch Dalmia Soave. "The Libertarian Moment and what it means for sex trafficking and the raw food movement."
-
On college campuses.
-
They should just get a court order forcing Apple to fund cryptocurrency startups.
-
-
Or, as any pet owner will confirm, you could just walk through the room because you'll inevitably trip over it
-
Leaving aside, of course, that philosophy and (hard) science are different fields of inquiry and not intended as substitutes for one another.
-
Socialism: looking for a black cat in a dark room, finding it, then chopping it up into little pieces so everyone can experience the joy of having a pet.
-
One Has Been Granted to Date.
Sounds like the regs need to be tightened up a bit.
-
Sounds like someone's unemployable nephew has asked his uncle the best way to pay off that ridiculously incurred student debt.
Apply for this government grant.
