The creator of the controversial BitLicense legislation has sought to make its effect more palatable for New York start-ups by offering them a form of temporary coverage.
Speaking at Money20/20 Las Vegas, superintendent of financial services Benjamin Lawsky announced the issuing of temporary licences to “smaller start-ups” in order to “let them grow” prior to being subject to the full extent of the law, Bloomberg notes.
“There has to be a way for startups to start up and play by the rules without getting crushed by huge compliance costs,” Lawsky conceded.
The BitLicense proposals caused significant upheaval in the cryptocurrency industry, with local authorities widely criticized for imposing overly restrictive measures on its organizations. There have been calls for the consultation period regarding the proposals to be extended so that both sides are able to air their views on what could prove to be a decisive moment for the future of cryptocurrencies in one of the US’ major financial centers.
Lawsky’s submission of a ‘temporary BitLicense’ seemingly seeks to provide this respite on a limited basis, but with fledgling organizations particularly in mind.
“We have faced similar issues among the smaller, community banks we regulate,” he stated. “We recognize that if a financial firm has 12 employees – and nine of them are compliance officers – that is not a winning business model.”
Nonetheless, the ability for even the more established entities to abide by the legislation in full remains the subject of considerable debate, and Lawsky’s latest amendment has already been met with skepticism.
“This is the classic “we didn't regulate you as bad as we said” offer to make the regulation seem “reasonable”. Transitional for what?” a popular reaction posted by one Reddit user reads in response to the information being published.
Meanwhile, in a strange twist, global policy counselor of the Bitcoin Foundation Jim Harper seemingly came out in support of a more regulated environment.
“Well-formulated regulation can help because you don’t want everyone to start a Bitcoin business,” he told the New York Times in an unexpected statement.
Cointelegraph is at Money 20/20 Las Vegas and will continue to bring you further updates on the latest occurrences from the event – check our homepage for more information.
Expert commentary
David Mondrus (CEO, Blockchain Factory):
“Transitional Bitlicense is a nonstarter as far as I'm concerned. It's much easier to simply block NY residents from accessing any service. Until the regulatory framework is clearer, having to comply with 50 states (and make no mistake, ALL the states want money laundering compliance), and the feds is very expensive. Much easier to simple comply with FinCEN and the 49 states who do not have policies in places.
“Lawsky is too big for his britches and still lives in the ‘NY is the center of finance’ world. He's obviously oblivious to HK and Singapore quickly supplanting NY as the finance centers of the world. And the harder he pushes the more companies will simply exclude NY, or in the worst case scenario move outside of US jurisdiction.”
Nathan Wosnack (COO, uBITquity):
“I think Lawsky hasn't the slightest clue about the regulatory frameworks he is attempting to implement, therefore is out of his league. He was appointed to his position, not elected. Ben Lawsky and other hapless bureaucrats only serve to continue to harm innovation by slapping down rules for Bitcoin when it is completely unnecessary. Ben has started his ‘soft’ implementation of rules instead of a hard-line approach as previously rumored in order to gain support and acquiesce from naive moderates who confuse ‘regulation’ as meaning ‘legitimacy.’
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