The BitLicence hasn’t exactly been warmly received so far.
Many businesses have come out criticizing it, with comments that range from cautious optimism that New York will come to its senses to a flat-out ultimatum that if things don’t change, businesses will be forced to block New Yorkers from doing business with them.
Now, a new round of criticism has come out against the BitLicence.
The Bitcoin Foundation
The Bitcoin Foundation made a request for information to the New York Department of Financial Services for their research material. The idea was that if the Bitcoin Foundation could have access to the material the NYDFS used to formulate their original BitLicence proposal, they would have a better idea of the thought process the NYDFS went through when they developed the BitLicence.
Their request was submitted on August 5th of this year, and the NYDFS promised to deliver the requested information to the Bitcoin Foundation within 20 days.
Later, though, the NYDFS went against their original statement and will now not deliver the requested material until December. And since the comment period deadline is October 20th, that research is then meaningless.
“The sacrifice of some decentralization in furtherance of other benefits to the Bitcoin ecosystem must meet a high burden of proof,” said Bitcoin Foundation Global Policy Counsel Jim Harper. “Nobody should want a regulation that sacrifices Bitcoin‘s benefits if doing so produces unknown or merely speculative benefits for New York consumers of the New York financial services market.”
He continues:
A regulatory regime that is markedly out of step with others is very likely to create inefficiency in national and global markets, which would suppress competition, hamper the delivery of benefits to consumers and frustrate consumers. New York is a very special state, but we recommend that it join the national and global community of regulatory bodies that are taking a methodical, iterative approach to Bitcoin business regulation.
Needless to say, the Bitcoin Foundation is not pleased.
Digital Currency Council
The Digital Currency Council is a group devoted to helping develop the Bitcoin and digital currency world. Their members are global, but much of their leadership is based in New York, so naturally they have a lot a stake with the BitLicence.
Digital Currency Council member David M. Long recently wrote a piece on the BitLicence, criticizing many of its elements. Of special concern was Section 200.12 of the Bitlicence. In order to comply, companies would have to retain the physical addresses of both parties to a transaction, one of the BitLicence’s biggest drawbacks.
Long finds this concept “highly objectionable, but for somewhat different reasons” than that expressed by Circle CEO Jeremy Allaire.
This provision clearly evidences New York’s effort to extend jurisdiction over far-flung geographic areas. As mentioned above, these geographic areas include countries where large numbers of the population are unbanked or underbanked. Indeed, according to a 2012 World Bank report, over 2.5 billion of the world’s poor are unbanked. In many of these countries, unlike in the United States and in other developed economies, often individuals lack a clearly identifiable physical address. Maintaining such a requirement is tantamount to blocking startups in these countries, and by extension the local population, from the opportunity to fully participate in the potential that the digital currency payment technology holds for the global remittance market. Indeed, access to affordable remittance services can prove life changing for many.
As Bitcoin becomes more of an appealing option to the world’s unbanked, Long’s point makes more and more sense.
Judgment Day Approaches
As October 20th inches ever closer, the Bitcoin community continues to comment on the BitLicence. Whether the NYDFS will cooperate or obfuscate, however, remains to be seen.
The CoinFront will continue to report on the BitLicence saga as more details unfold.
The BitLicence's Opponents Continue To Pile Up
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