The 30-day period for public comments on the latest draft of New York’s BitLicense proposal comes to a close today, March 27th.
While the original comment period did result in tremendous developments to the proposal, many in the bitcoin intustry felt that there were still many onerous components that inhibit the development of new companies.
Fred Wilson, founding partner at Union Square Ventures, said on his blog that startups should have to follow all the rules and laws of the land. “However, the arrival of new technologies should always be seen as an opportunity to review and update our laws and regulations in accordance with the benefits and challenges brought by these new technologies.” http://avc.com/2015/03/comments-on-the-proposed-bitlicense-regulations/
But Wilson argued that the revision to BitLicense has some unfair rules. The first has to do with money laundering requirements. According to Wilson, “Virtual currency exchangers and administrators are already required to comply with federal AML regulations. In many ways this is a good thing. FinCEN (the federal money laundering regulator) set a clear federal standard for all bitcoin companies in March 2013.”
Where this becomes a problem for Wilson is that a state-by-state requirement becomes tremendously arduous. The basic question is: If the Federal Government already has a rule, why make another rule?
Coinbase also was against this requirement. In a blog post, the company said: “The result would indiscriminately force all Coinbase customers in New York to pay a toll, vis-a-vis aggressive personal disclosure and verification procedures, as a prerequisite to establishing a Coinbase account.” (https://blog.coinbase.com/2015/02/27/bitlicense-part-two/)
And Coin Center agrees. “The BitLicense’s AML requirements go too far, imposing costs onto Bitcoin businesses that are not borne by any other money transmission business under state or federal law,” Peter Van Valkenburgh, Director of Research at Coin Center, wrote.
But it’s not just the Anti-Money Laundering rules that are onerous. Wilson also talks about how every virtual currency company is, by default, regulated as a money transmission business. “The Bitlicense requires similar provisions to what is already in place for money transmitters under state regulations, thus creating duplicative and redundant compliance obligations, which, again, could end up being replicated in all fifty states around the country,” he wrote on his blog.
Primarily, what Wilson, Coinbase, and Coin Center are arguing for is equal treatment like any other money transmitting business. The companies are not looking to avoid regulation; rather, they are simply looking to be regulated like any other comparable business.
Coin Center took things much farther than just Mr. Wilson and Coinbase, offering their entire public comment that was delivered to the New York State Department of Financial Services. Their entire comments can be seen here. (https://coincenter.org/2015/03/comment-revised-ny-dfs-bitlicense-proposal/)
Fundamentally, the three groups believe the DFS has worked hard to try and create a set of rules that are fair to the virtual currency businesses.