Quite a few Bitcoin enthusiasts are closely eyeing the regulatory proceedings in the United States. Multiple states are looking at ways to give Bitcoin a legislative and regulatory framework, affecting both individual users and companies in the area. After the disaster of BitLicense, California was the next state on the list to propose a framework draft. That Bitcoin bill was shut down quickly though, as it failed to pass in Legislature a few days ago.
California’s AB 1326 Bitcoin Bill
It goes without saying that any form of Bitcoin regulation is faced with much scrutiny. Given the status of BitLicense in New York and all of the havoc it has created on Bitcoin operations in the state, there was a lot of concern regarding California’s AB 1326 Bitcoin Bill. In fact, some experts went as far as calling it the “BitLicense of California”, which could spell disaster for virtual currency in the state.
Similar to how BitLicense operates, Californian Bitcoin companies would be forced to apply for a specific license, or withdraw their services from the state altogether. Luckily for all parties involved in the Bitcoin world, the AB 1326 Bitcoin Bill never passed Legislature before the deadline of September 11th.
In an unexpected turn of events, the AB 1326 Bitcoin Bill not only faced scrutiny from the Bitcoin community, but also from Californian legislators. A call campaign against the Bitcoin Bill was launched shortly after the draft was announced. This combined effort by the Electronic Frontiers Foundation, TaskForce and Fight for the Future resulted in harsh, but clear concern over the bill.
“Virtual currencies like Bitcoin are still in their earliest stages of development. Regulating them now will lock us into an early moment in their evolution, before we know where the technology is headed. Furthermore, the California virtual currency license is being touted as a model bill. That means its backers are trying to pass it here, then spread it across the country state-by-state.”
But the AB 1326 Bitcoin Bill had some supporters among the Bitcoin community as well. Coin Center’s Jerry Brito argued that the bill needed some minor changes to make it workable, but passing AB 1326 would prevent Bitcoin from falling in the same category as traditional money transmitters. Especially the lack of an exemption for software development, startups and Bitcoin miners make the traditional money transmitter regulations a real threat to virtual currency.
Cause for Optimism Among Bitcoin Community
Despite the California AB 1326 Bitcoin Bill not passing Legislature, there will be more attempts to draft up regulatory guidelines for virtual currency in this and other states. Bitcoin could greatly benefit from a properly defined set of rules and regulations, giving the virtual currency a more “legitimate” appeal.
However, AB 1326 could very well be a sign of things to come as far as Bitcoin regulation in the US is concerned. With each state having the option to draft their own bills and proposals, there will be several BitLicense clones popping up in the next few years. Hopefully, all of those drafts will be toned down a bit, creating a viable regulatory ecosystem for Bitcoin startups.
By making your opinion heard, you can affect local regulatory Bitcoin attempts. Reach out to your alderman, parliament or government as soon as they are coming up with a Bitcoin regulation draft. Without a proper dialogue between legislators and Bitcoin community members, there can never be proper regulation.
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