While bitcoin and cryptocurrency regulation is essential, it’s also very important to draft these guidelines in a way that will be for the good of all. However, in recent times, most regulatory authorities have formed a bad habit of creating oppressive laws that do nothing but stifle the growth of the digital currency industry. One of such laws is New York’s BitLicense. Now bitcoin enthusiasts in New York have risen to fight against this punitive regulation.
Since introducing the BitLicense requirement for bitcoin service providers almost four years ago, the state of New York has not been crypto friendly.
Before the BitLicense law was enacted, there was a general consensus by early bitcoin adopters to have a set of clear rules and regulations that would govern the virtual currency industry. These regulations would offer consumer protection as well as ensuring that the finances of bitcoin-related businesses were as transparent as possible in order to prevent a recurrence of the Mt. Gox saga.
When Benjamin Meier Lawsky, the Superintendent of the Department of Financial Services (DFS) announced the BitLicense proposal, the entire Bitcoin community at the time was quite appreciative of the willingness of the State authority to make collaboration happen.
However, after a long debate on the matter, almost everybody in the Bitcoin ecosystem concluded that the BitLicense proposal was too harsh and it would be almost impossible to trade in compliance with the regulatory framework suggested in the draft proposal.
A summarized version of the BitLicense Proposal read:
- Background check required for employees/founders with their fingerprints submitted to the FBI.
- Companies must keep at least a ten-year record of their transactions. It is also compulsory for firms to invest in New York bonds.
- Retained earnings and profits can only be invested in US dollars: Federal bonds, state bonds or money market funds.
- Firms must submit quarterly financial statements within 45 days of the closing of each quarter; financial statements must be audited using GAAP.
The proposal also requires a written approval of all new business activities and offerings; along with many other unnecessary requirements.
Abolish the BitLicense
Even though some companies have succeeded in obtaining their BitLicense for a huge fee, most of these cryptocurrency-related firms are no longer active in New York City.
From paying non-refundable legal fees of roughly $100,000 or more to meeting other draconian requirements, Firms in the cryptocurrency industry find it a herculean task to obtain their BitLicense therefore these bitcoin enthusiasts have deemed it fit to organize a movement to “Abolish the BitLicense.”
There is no denying the fact that BitLicense makes bitcoin and other cryptocurrencies legal in a way, it is, however, pertinent for authorities to review most of its regulatory requirements to make it easier for startups to obtain it, instead of chasing them away to other bitcoin-friendly states with the regulation.