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NY Regs Threaten Bitcoin and Digital Currencies

by Bradley Jansen July 23rd, 2014 12:15 pm

The New York Department of Financial Services (NYDFS) has issued new proposed proposed BitLicense rules and regulations that would curtail not encourage digital currencies like Bitcoin.

Many years ago when I first started in Rep. Ron Paul's office, I initiated and led a fight against a similar anti-money laundering proposal called "Know Your Customer" which would have increased regulations, violated financial privacy and threatened currency competition. Lots of background on that fight here.

I and other bloggers here have written a lot on how the anti-money laundering regulations do more to inhibit currency competition now than legal tender laws do. Lots of background here. Check out Larry White's talk about these issues at Cato too:

The Chamber of Digital Commerce is calling on the Bitcoin community to submit comments to the NYDFS. Instructions on how to submit comments can be found on the NYDFS website at http://www.dos.ny.gov/info/register.htm.  More on the new Chamber of Digital Commerce here.

A new digital currency trade association is fighting the regulations. Their press release can be read here:

“One egregious aspect is that the NYDFS is only giving 45 days to comment, which is severely inadequate to proposed regulations of this scope” said Perianne Boring, President of the Digital Chamber. “We are requesting that the NYDFS extend the comment period through the end of 2014, to allow the industry adequate time to properly review and respond.”

When fighting the KYC proposal, I generated 300,000 comments against the proposal (with only 105 in favor). Let's organize those groups and experts interested in these issues to figure out how to fix this proposal now: contact me at bjansen @ financialprivacy.org and stay tuned here if interested in joining this fight!

Kudos for the NYDFS for being pro-active to secure a legal path to digital currency use, but the proposal as written would do much more harm than good. Let's hope they are open to making sure they get this right and don't end up shifting digital currencies and other financial innovations away from New York. Even more thanks go out to Perianne Boring for her efforts!

Now is the time to stand up and make the world (well, at least New York) safe for digital currencies and alternatives to the Fed!

 

EDIT: the new proposed rules are now online here (scroll to page 14):

 

The National Law Review has a post here.

2 Responses to “NY Regs Threaten Bitcoin and Digital Currencies”

  1. avatar wcoats says:

    All currencies should be subject to the same regulations so that one is not artificially favored over others on the basis of discriminatory regulations. Most of the AML stuff is a costly waste of money and should be attacked and done away with. However, whatever is in place for dollar payments, Euro payments, etc should apply to bitcoin payments as well.

  2. avatar Bradley Jansen says:

    Warren, glad to see you're on board with my call to repeal the anti-money laundering laws, and yes, of course, regulations should ideally be uniform (literally, to make regular), but you might want to look at the text of the proposed regulation (I just added it now that it's public). The proposal does not follow your otherwise sound advice. In addition, there are well-known problems with regulations inhibiting innovation and stifling competition. This proposal acts more to protect established currency market players than it does to protect consumers.

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