BitLicense is the first proper form of Bitcoin regulation in the United States, even though most Bitcoin companies do not agree with the proposed requirements. Whereas several Bitcoin exchanges are leaving the New York state area, Bitstamp has announced they will, in fact, be applying for a BitLicense in order to comply with current regulations.
BitLicense Causes Lots of Controversy
Bitcoin regulation is still an important aspect for digital currency to be recognized as a legitimate form of digital money. Yet at the same type, the first revisions of Bitcoin regulation are quite harsh, especially as far as BitLicense is concerned. Applying for a license is expensive, and there is a thorough process every company has to go through.
Additionally, most Bitcoin companies have an issue with the requirement to collect a ton of personal information for every customer. In the case of exchanges, most of that information would be required anyway. Handing over the details, including verification documents, to government officials however, is a bridge too far for most companies.
As far as BitLicense regulation is concerned, there are only two options available for Bitcoin companies: obtain the license, or suspend all services in the New York state immediately. So far, various companies, including ShapeShift, BTC Guild and BitFinex have chosen the latter option and have suspended their services for New York state customers.
Overall, industry experts see BitLicense as an invasive way to enforce traditional financial regulatory requirements upon a new breed of technology. Bitcoin is a new form of money that most people fail to comprehend properly, yet want to regulate at the same time. A lot of unnecessary friction is caused by BitLicense, and the Bitcoin community hopes to see the regulatory requirements getting toned down in the not-so-distant future.
Bitstamp is the Odd Duck Applying For BitLicense
But not every company is looking at BitLicense through a black-and-white spectrum. Popular Bitcoin exchange Bitstamp sees the benefit of obtaining a BitLicense in the state of New York, despite quite a bit of outrage from customers. Most Bitcoin enthusiasts side with the companies who oppose BitLicense, and this move could have drastic consequences for the Bitstamp exchange.
Bitfinex, the US’s largest Bitcoin exchange service, announced their withdrawal from the New York state due to BitLicense requirements. Even though the removal of such a major player opens up the door for competitors like Bitstamp to attract more customers, the end result could have an adverse effect.
Quite a few Bitstamp customers see this decision as a “stab in the back” of the Bitcoin community itself. Rather than creating a united front with companies such as ShapeShift and Bitfinex, Bitstamp has decided to follow their own path and see where it leads them. It will be quite interesting to see how this situation plays out a few months from now, and whether or not the company will obtain their BitLicense.
Images courtesy of Shutterstock, Bitstamp