New York

How Statists & Regulators Turned New York Into a Bitcoin Hell Hole

New York regulators have issued just two BitLicense permits in the 18 months since the regulations became law, it has been revealed — while rejecting four.

Also read: No Bitcoin Treasure Island yet as Iceland’s Pirate Party Falls Short

Patrick Murck: BitLicense ‘Put Industry Behind’

A Reuters request also revealed the BitLicense program has an application backlog of 15, with a lack of qualified staff blamed for the snail’s rate approval progress.

“By putting the regulations together and having key staff members leaving almost thereafter, they really put the industry behind the eight-ball in terms of competing with traditional service providers,” former Bitcoin Foundation executive director Patrick Murck told the publication.

The BitLicense project, which became notorious in cryptocurrency circles during its creation and release, was spearheaded by former Superintendent of the New York Department of Financial Services (NYDFS) Benjamin Lawsky.

Lawsky was vocal about needing comprehensive regulation of cryptocurrency businesses within the state of New York. This perspective drew heavy criticism from businesses and commentators.

However, when the preliminary BitLicense regulations became legally binding in June 2015, Lawsky abruptly left, along with several senior staff shortly afterwards.

Can New York’s Allure Shine Through Regulators and Bureaucracy?

Since then, it appears progress has all but ground to a halt, with critics noting other states will soon outwit New York in supporting progressive or disruptive technology businesses.

California, for example, dropped proposals for a similar BitLicense in August. This month, the state even permitted comprehensive merchant payment solutions for medicinal cannabis using cryptocurrency.

New York has become something of a dinosaur even at consumer level, with popular cryptocurrency services such as ShapeShift and Poloniex blocked in the region. Users are currently forced to go to New Jersey instead.

Meanwhile, support is again rallying against a proposed update to Bitlicense which would impose further requirements related to cybersecurity.

The addendum would “would require each covered entity to assess its specific risk profile and design a program that addresses its risks,” JD Supra reports, and would cover “any person operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the banking law, the insurance law or the financial services law.”

Another interesting development is this week’s announcement of former NYDFS advisor Dana Syracuse’s appointment to Blockchain advisor for lawyers Perkins Coie. Syracuse played a key development role during Bitlicense’s conception, but left NYDFS soon after.

Hope Not Lost?

However, not everyone is downbeat about the state of Bitcoin business in New York. Coin Center executive director Jerry Brito told Reuters the economic status quo will ensure the jurisdiction still gets its fair share of innovation.

“I think it’s going to be rare that companies say, ‘We’re not going to do business in New York,’” he said.

What do you think is the future for BitLicense in New York? Can regulators remedy the current situation? Let us know in the comments section below.


Cover image via Shutterstock 


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