Coin Center, ITIF See Problems With NYDFS Proposed BitLicense
The proposed BitLicense by the New York Department of Financial Services could create consumer privacy issues and complicate other state and federal regulations for cryptocurrencies, said bitcoin advocates and think tanks in NYDFS comments Tuesday. The comment period for the…
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proposed BitLicense (http://on.ny.gov/1rkfYEO) ended Tuesday, but another round of comments is expected after revisions stemming from the first round, said Peter Van Valkenburgh, Coin Center research director, in an interview. Some states, like Texas, allow virtual currency transmitters to apply for normal money transmission licenses, but the NYDFS decided to “tailor” specific regulations for virtual currency transmitters, said Valkenburgh, who co-wrote joint-comments with the Center for Democracy and Technology and TechFreedom (http://bit.ly/1vIElwF). The BitLicense’s requirement for who should apply for such a license is “nebulous and confusing,” Valkenburgh said. There’s a “fear” that software programmers who write code for cryptocurrencies would need to apply even though they don’t use those currencies, he said. Valkenburgh said the joint comments focused on “financial privacy” issues, because cryptocurrencies have the “potential to be safer than credit cards.” But under the BitLicense, firms would be required to keep records of their customers, and perhaps, their customers’ third parties, he said. The Information Technology and Innovation Foundation applauded the “desire to bring regulatory certainty, transparency, and clarity to virtual currency businesses.” But ITIF said in a Tuesday filing that the “State of New York is likely the wrong entity to address these important policy issues” (http://bit.ly/1wi6mdx). “Subnational governments, like states, should not compound the problem of multiple and varied laws between countries by creating their own additional rules and regulations,” it said. ITIF recommended the NYDFS “exempt virtual currency mining operations, virtual currency businesses that don't have full control of the virtual currency on behalf of their users, and businesses without a meaningful connection to New York from these proposed regulations.” It also suggested the department “exempt virtual currencies used as a platform for non-financial services and nascent virtual currencies from these proposed regulations” and “relax disclosure requirements for material changes to business, user identities, and the affiliates of companies with a BitLicense.”