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New York Needs Bitcoin: In For the BitLicense Long Haul

By Jacob Cohen Donnelly Oct 23, 2014 2:23 PM EDT

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NEW YORK (InsideBitcoins) — New York State may be developing a “legal framework” to regulate bitcoin companies, but a team of entrepreneurs are doing whatever they can to ensure the success of the digital currency in the Empire State.

NYNeedsBitcoin.com is an advocacy group launched by the team behind StartBitcoin. The founders, Elizabeth Stark and Austin Walne, have considerable experience in the virtual currency and advocacy. Stark used to lecture at Stanford and Yale on technology policy and holds a J.D. from Harvard Law School. Walne is a bitcoin entrepreneur.

Providing easy feedback

“The goals of NYNeedsBitcoin.com are two-fold,” Walne told Inside Bitcoins via email. “The first is to provide a place to learn about the BitLicense provisions and read responses from bitcoin companies, organizations, and community leaders. The second is to make it easy for members of the community to submit their feedback to NYDFS who might not otherwise submit a formal comment letter on behalf of a company or organization.”

The problem is that many people don’t have an easy means of communicating with the New York Department of Financial Services. Up until the just-ended initial comment period, NYNeedsBitcoin.com allowed the average user to send a message to the NYDFS.

“BitLicense hurts the next generation of “bitcoin 2.0” applications that use tokens and blockchain technologies for primarily non-financial purposes by regulating them as if they were financial institutions or money transmitters,” Walne added.

Safe harbors rather than licensing

But it’s not enough to just complain about a potential rule. It’s also important to offer an opinion on the right course of action.

“We think Safe Harbors are a better way forward than licensing. Key safe harbor regimes like the Communications Decency Act section 230 or the Digital Millennium Copyright Act section 512 were essential to the growth of the early Internet,” Walne said.

There are four safe harbors in the Digital Millennium Copyright Act (DMCA): Transitory digital network communications, system caching, information residing on systems or networks at the direction of users, and information location tools. These were put into the law to limit the liability for copyright infringement.

“Instead of creating a BitLicense, the DFS should create a BitSafeHarbor,” Walne said. “This safe harbor should include a set of industry standards and best practices that companies in the space would have to abide by to ensure consumer protection and public safety.”

Preventing a bitcoin exodus

Walne believes this idea of a BitSafeHarbor would allow small, young startups that are just getting started in the bitcoin world to have time to grow. If they’re not bogged down with regulatory compliance, these companies will be able to invest in their business, which will entice backers to invest. It’s all for the ecosystem. And Walne is concerned about that: “BitLicense harms the NY Tech Ecosystem because we’ve already heard stories of bitcoin companies planning to leave the state or technologists preparing to block NY residents from their services.”

The initial comment period for the BitLicense proposal is over but with expected revisions, another time for public input will begin. And NYNeedsBitcoin.com is prepared to offer a platform – and conduit – for the bitcoin community to voice its opinion for however long the process takes.

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