Thursday, July 24, 2014

The Backlash Against the New York Bitcoin Regulations

As New York takes its first stab at regulating the shady online currency Bitcoin, Massachusetts innovators say that such regulations could permanently stifle innovation and even push it overseas.

Bitcoin purchases are currently anonymous. Proponents say that fosters innovation and speedy transactions. Others say it harbors drug deals and even hitmen for hire.

The New York Department of Financial Services last week proposed a plan aimed at raising the curtain that now shrouds bitcoin sales, thereby making online currency trading far more transparent and accountable.

If accepted, the regulations would make New York the first state to have virtual currency legislation on the books, according to TIME.

The proposed regulations would require any company that wants to peddle bitcoin to obtain a licence to do so. They would also force the company to keep detailed books and adhere to rules intended to prevent fraud and money laundering.

“We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity—without stifling beneficial innovation,” wrote Benjamin Lawsky, the superintendent of the New York State Department of Financial Services, on Reddit last week.

Boston entrepreneurs disagree, saying that such regulations if adopted elsewhere, such as in Massachusetts, would reverse the strides the state has taken to encourage innovation.

“The proposed NYDFS regulations would absolutely stifle innovation with this emerging technology, or at the very least, ensure that the innovation takes place overseas,” says Dan Elitzer, founder and president of the MIT Bitcoin Club. “Students and entrepreneurs would be prevented from even tinkering with basic applications and services that touch Bitcoin in any way.”

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