Bitcoin

New York Tries to Regulate Bitcoin Businesses Right Out of the State

|

As Wired reports today, in an attempt to be proactively intelligent on managing the risks of the exciting new business world of cryptocurrencies or whatever other nonsense regulators think about what they are doing, regulations are proposed that would kill nearly all valuable about Bitcoin and likely drive all such businesses away from New York:

The guidelines ask bitcoin businesses to keep track not only of the physical addresses of their customers, but also of anybody who sends their customers money using the bitcoin network. That undermines the fundamental value proposition of bitcoin, which works very much like the internet's version of cash. But there's more. Bitcoin businesses must also file frequent reports to Lawsky's organization, the New York State Department of Financial Services, or DFS, to detail changes in ownership, financial forecasts, even strategic business plans.

If adopted, these requirements will make things very tough for bitcoin startups, who have limited resources and are scrambling to invent whole new types of businesses….

Another big problem is that the regulations appear to cover a whole new class of bitcoin businesses that are not presently subject to federal regulation. These include online wallet companies like Blockchain and BitGo, and maybe even bitcoin tipping apps. That's "ridiculous," according to Patrick Muck, general counsel for the Bitcoin Foundation. "Really the scope of this thing ropes in the whole industry," he says. "This proposal would set New York up as a quasi-federal regulator for the entire bitcoin industry."….

Roger Ver, a libertarian who and serial bitcoin business investor, believes that—if adopted— the rules will drive bitcoin businesses out of New York. "These men calling themselves government are not asking anybody to do anything. They are making demands, and will put us behind bars if we don't obey," he says. "Bitcoin was specifically designed to strip away power from men who would be so presumptuous to believe that they have the right to rule over others."

I wrote last May about ways government would try to stymie, but could not ultimately halt, the largely decentralized international cryptocurrency.