Poloniex Leaves New York Due To BitLicense

Another Bitcoin business is leaving New York due to the BitLicense. Poloniex the U.S. based Altcoin and Bitcoin exchange is shutting its doors to New York residents on August 8. Customers of the site have been issued an email warning letting them know they must remove funds if they reside in NY.

In accordance with the New York State Department of Financial Services, Poloniex will no longer be allowed to provide services to residents of the State of New York starting on August 8th, 2015. If you are a resident of New York, please take appropriate measures to withdraw your funds by 11:59pm Eastern Daylight Time on August 7th, 2015. For more information or for further assistance, please contact our support staff by going to poloniex.freshdesk.com.

— Poloniex Bitcoin Exchange

With the BitLicense full steam ahead lead by Ben Lawsky and lawmakers people are starting to worry about this stifling innovation and business. On the 24 of June the BitLicense was adopted by New York legislation and is now recognized by The New York State Department of Financial Services (NYDFS). Businesses operating with Bitcoin and virtual currencies must apply for the license within 45 days from its initial announcement. August 8th is the deadline for all Bitcoin companies to comply. The transcript reads:

Any person engaged in virtual currency business activity that fails to submit an application for a license within 45 days of the effective date of this regulation shall be deemed to be conducting unlicensed virtual currency business activity.

— BitLicense Transcript

Shapeshift the crypto exchange based in Switzerland has also halted services in the State of New York due to the BitLicense. Founder Erik Voorhees believes the license is unethical, and exposes personal user information. Following this decision Voorhees created Please Protect Consumers a website that is against mass data collection and the sharing of personal user info. Voorhees company was applauded by many in the Bitcoin community to be the first to not comply with the state’s regulations and data collection. Notably Andreas Antonopoulos tweeted out to fans after this announcement his perception of what Shapeshift did:

Kudos to ShapeShift for refusing to become a honeypot of PII just to satisfy NY regulators. — Andreas Antonopoulos via twitter

Recently former Superintendent of Financial Services of the NYDFS, Ben Lawsky who introduced the BitLicense stepped down. Lawsky has been a staunch supporter of its regulations has been accused of setting it up for his own newly created legal firm, The Lawsky Group. The group is said to be working directly with cryptocurrency and online security so its not a very far fetched allegation. However in an interview with American Banker Marc Hochstein Lawsky denied this accusation from the community. Lawsky says since leaving his post he is unable to work with anything BitLicense related which is against the law. Covering his recent resignation in the interview he does counter this argument, although it raises the question of his prior work and huge pushing for the license itself which seemly looks rather crony to the eyes of many Bitcoin supporters. Lawsky told Hochstein:

The rules are very clear. I can’t work at all for life on anything I ever worked on. If anyone said ‘I want to hire you to help get a BitLicense from DFS’, no can do.

— Ben Lawsky Interview

Given that Lawsky in the same rebuttal still said he would work with Cryptocurrency related situations he had left himself a loophole in regards to the law he created. With the clock ticking faster towards August 8th many wonder if more businesses will refuse to operate with New York. It seems that regulations created by the BitLicense and Lawsky’s team are far too harsh for some companies to deal with.

The data collection is believed by the community to be unethical. With revelations given by Edward Snowden it’s no wonder why the public is not too pleased with data collection this day in age. Cronyism as well is rampant in this country perverting capitalism in the worst of ways. The mixing of corporation/business and law is very crony when its meant to help the creators of the License. The community is not happy with Lawsky creating a handbook of laws created by fallible men and then suddenly starting a cryptocurrency law firm and his denial was not well received. It will be interesting to see what businesses use Lawsky’s new legal firm or if he becomes boycotted in the same fashion as his recently created BitLicense.

Financial regulators and policymakers need to recognize that when it comes to digital currencies and other new payments technology – the genie is already out of the bottle.

— Ben Lawsky BitLicense Speech June 3, 2015

Eyes are watching for more companies to follow suit with Shapeshift, and Poloniex’s measures. The Genie is out of the bottle, yet many Genies are also leaving the bottle of New York state and its heavy regulation. Other harsher regulatory states such as California is also looking to enforce law on the virtual currency as well.

Do you think the BitLicense is cronyism? Let us know in the comments below.

Images courtesy of Shutterstock, reddit and Redmemes

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Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written hundreds of articles about the disruptive protocols emerging today.