Last week, the New York Department of Financial Services released a series of proposed regulations called “BitLicense.” However, according to a recent TechCrunch contribution piece, the regulations will likely do more harm than good.
The article’s authors explained that the proposed rules are so broad they could potentially force an entire startup industry out of NY state.
“While we understand [the] desire to balance innovation with consumer protection, [the] current proposal does not accomplish that goal,” the authors wrote. “If passed in its current form, it will only allow the regulators to accumulate even more power while stifling an entire industry.”
One of the TechCrunch writers’ least favorite aspects of the proposed regulations are that all founders and employees must submit their fingerprints to the FBI and disclose personal financial information of founders and officers to NY State. Additionally, startups would need to conduct expensive audits and security testing that few small companies could afford, according to the writers.
Overall, the article explained that BitLicense may help legitimize larger firms – think Coinbase and SecondMarket. However, if the legislation is enacted, New York will likely chase virtual currency startups away.
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