According to the CoinDesk Blog, “[o]ver-regulation, including a requirement for many digital currency businesses to register as money transmitters separately in all 50 states, is seen as a barrier to entrepreneurship in the US and many of the world’s largest bitcoin businesses are located elsewhere.” http://www.coindesk.com/new-york-state-announces-bitcoin-hearings/ There is no truer statement. This single regulatory nugget has the potential to significantly stifle innovation in bitcoin, as well as in the cryptocurrency space overall, in the United States.
With that said, I am heartened by the fact that New York State is preparing to hold hearings on bitcoin and the regulation of digital currencies in general. It is important that New York take a leadership role in the development of digital currency regulations that promote innovation, or, at the very least, do not affirmatively stifle it.
In November, the New York State Department of Financial Services released the following statement about the upcoming hearings:
“Our public hearing will review the interconnection between money transmission regulations and virtual currencies. Additionally, the hearing is also expected to consider the possibility and feasibility of NYDFS issuing a ‘BitLicense’ specific to virtual currency transactions and activities, which would include anti-money laundering and consumer protection requirements for licensed entities.”
Hopefully, New York will ultimately prove to be a leader in fashioning a digital currency regulatory scheme that makes sense and promotes innovation in the cryptocurrency space. We will be following these hearings closely.