The Bitcoin Foundation found a tough, but open crowd, when it visited with members of the New York legislature recently. Up for discussion was what to do with cryptocurrencies, which continue to be bones of contention in the Empire State.
There is a divide between the crypto community and lawmakers over how to regulate the space. Lawmakers have squabbled with members of the Bitcoin community about its BitLicense, which is a business license of virtual currency activities issued by the New York State Department of Financial Services (DFS).
Here, we’ll go over what happened when the two sides sat together to discuss crypto-related issues.
Reaching common ground
During the roundtable discussion held Friday, the executive director of the Bitcoin Foundation was on hand to make the crypto community’s concerns known. Llew Claasen said it was encouraging to see lawmakers explore these concerns by inviting members of the cryptocurrency community to participate.
One thing that’s clear is both sides being aware that a legislative assessment of the impact of cryptocurrency activity in New York is needed from a number of different perspectives. At the top of the list are developers, current users of the technology, consumers, and regulators.
That’s just about where the flattering comments ended.
BitLicense is flawed fundamentally
When the sides got into the nitty gritty about cryptocurrencies, it was the state’s BitLicense that Claasen took a particular displeasure with as it relates to the space.
Claasen said the foundation’s primary concern about BitLicense is that it is fundamentally flawed. The foundation sees BitLicense as a catalyst to chasing away crypto-related business from New York. It also puts the state at a significant disadvantage for future crypto-related companies deciding to move to the state.
“At the outset, a regulator is not entitled to choke off an industry on a whim, is certainly not entitled to act beyond its statutory authority, and is certainly not entitled to use a burgeoning technology as “guinea pigs” to regulate future financial activities.”
Ideas bandied about to deal with the flaws included distinguishing Blockchain from Bitcoin, cryptocurrencies, initial coin offerings, and digital tokens.
Will Martino, a co-founder Kadena, spoke about how his digital ledger business was being negatively impacted by the BitLicense provisions. He reportedly said that BitLicense’s provisions present challenges that could cause it to cease operations in the state. He noted that his startup business did not transmit or exchange real digital currencies, nor did it conduct any transactions dealing with money. However, its digital ledger business still falls within the constraints of BitLicense.
At least one lawmaker seemed to understand where Martino was coming from, and said there was no reason that technologists need to be subject to overbearing licenses. He added that such interference was one of the things that was hindering innovation in the crypto space.
Claasen said his group wanted a solution, or solutions, to be put in place so that BitLicense functionally works for New York’s residents, and the state’s economy. He said he sees a solution being to legislatively reverse the premise behind BitLicense.
Another senator agreed that reform was needed, noting that such a bill to address the issue could be introduced soon. The senator, David Carlucci, said that finding a solution was one of the reasons lawmakers were willing to hold the discussion and hear from the crypto community.
Lawmakers plan to draft a report that will include a laundry list of the problems noted at the roundtable event. The goal is to hold another roundtable within the next two months to further discuss the issues.