Just weeks after New York officially drove several major Bitcoin businesses out of the state through regulation California chose a freer path forward for digital currency in The Golden State. The equally archaic and onerous version of its own “BitLicense” was defeated within the state’s legislature on Friday.
California refuses to make New York’s mistakes
Few things in Bitcoin’s brief history have done as much damage to the Bitcoin ecosystem as has New York State’s infamous “BitLicense” legislation. Filled with fiery hoops for hardcore New Yorker’s to jump through, it succeeded in driving several large and successful Bitcoin out of the state. Not only were countless jobs and revenue lost, but a poor precedent was set by the regulators in the Big Apple, which is largely seen as an economic leader worldwide.
As if taken from New York’s BitLicense directly, Bill AB 1326 will make compliance as difficult and as intrusive as possible. Highlights include asking for highly irrelevant information from all partners, officers or company managers like educational background, ten years of employment history and work address.
Non-refundable application fees for a California digital currency business license would cost up to US$5,000 plus a US$2,500 annual renewal fee. One could be reduced to $500 every two years with certain qualifications, including if the commissioner deems your business to be “low or no risk to consumers.”
You can read the full proposal here, but if you read through New York’s BitLicense, you’ve pretty much got the gist of it. The new Commissioner in charge of the digital currency industry in the state, with many ties to the commercial banking industry, would have had absolute power to revoke or deny a license on a very subjective basis.
The proposal states that the “competence, experience, character or general fitness” of the licensee or any director, officer, employee, or person “in control of a license” can be deemed “not in the public interest” and be stopped from providing virtual currency services.
The bill, if it became law, would’ve gone into effect on July 1, 2016. It is currently in “inactive” status, and cannot be brought up again for consideration before January 4, 2016.