One of the most worrying aspects of the BitLicense regulatory framework is the exodus of Bitcoin companies in the New York State area. Over the past few weeks, it has become quite clear that companies deciding to be compliant with BitLicense might face some serious backlash from its users. For those of you who are wondering which companies are actively pursuing a BitLicense, the following short list will give you an idea.
Exchanges Are Split In Two Camps
The major target of BitLicense is Bitcoin exchanges, as these centralized services hold customer funds in both fiat currency and Bitcoin. It was only a matter of time until Bitcoin exchanges were labelled as money transmitters and with BitLicense regulation put in place, obtaining the required licensing has gotten a lot more expensive.
Several major Bitcoin exchanges have decided to comply with BitLicense regulatory requirements, although not all of them are on the same wavelength. Service providers such as Coinbase, Bitstamp, MonetaGo, Circle and Bittrex are all in the process of applying for their individual BitLicense,
Bittrex is of particular interest in this case, as it is the only virtual currency exchange platform not dealing in fiat currencies. Bittrex is known for giving users the option to trade Bitcoin and a ton of altcoins intermittently. However, the exchange does hold customer funds at all times, as withdrawals are processed in queues, and not instantly.
On the other hand, quite a few major Bitcoin exchange platforms are not applying for BitLicense, simply because it is too costly and an intrusion of customer privacy. LocalBitcoins, BitQuick, BitMex, Kraken, Bitfinex, GoCoin, Poloniex, Shapeshift and LakeBTC have formed a front to oppose the BitLicense requirements, in the hopes of creating less invasive regulatory conditions in the near future.
At the time of writing, there has been no official response from the New York Department of Financial Services in regards to more lenient BitLicense regulatory requirements. With quite a few companies actively pursuing a license, it seems like New York state will be a battleground for Bitcoin regulation for many years to come.
Majority Of Bitcoin Companies Are Leaving
Regardless of whether you think BitLicense is right or wrong, there is no denying that most Bitcoin companies are ceasing operations in the New York state area due to these regulatory requirements. BitLicense seems to be designed to kill any Bitcoin innovation in the area, without properly understanding the technology or its positive implications.
Even though this is only one US state, many more states may use the BitLicense regulatory framework as a template to draft their own requirements for Bitcoin companies. Stifling innovation at such an early stage will work counterproductive in the long run, as there is no way for state or government officials to control Bitcoin in any way.
That being said, the only way to force a change in the regulatory requirements is by making your voice heard. Bitcoin enthusiasts living in the New York state area should reach out to their councilman and demand a revision of these requirements. Otherwise, BitLicense might be the least of our worries in the near future.
Source: News Tip Via Email
Images courtesy of NYDFS, Shutterstock