The Electronic Frontier Foundation (EFF), the leading non-profit organization defending civil liberties in the digital world since 1990, is opposing California’s impractical Bitcoin regulation proposed as A.B. 1123.
Working with digital currencies is a fickle thing legally. Different states have different regulations and there is not enough precedent to accurately predict which way a judge will go in a case. To help address this concern, more than 50 attorneys from around the nation created the Digital Currency and Ledger Defense Coalition (DCLDC). Designed to protect the civil liberties and constitutional rights of cryptocurrency users and companies. They hope their formation will encourage more companies to innovate without fear of legal reprisal.
“Law enforcement and regulatory actions relating to this technology have been steadily increasing over time and are all too often misdirected or premature[.] It is all too common for responsible entrepreneurs and companies to be subjected to unfair scrutiny by some federal or state agency, which, at a minimum, stifles them and broader innovation.” stated DCLDC chairman Brian Klein, who is also a partner at Baker Marquart LLP, in a statement given to the media.
Besides the over 50 lawyers spread across 40 lawfirms, universities and non-profits have also joined the coalition. The statement includes a list of participants.
All emergent technologies have issues with established laws and politicians who struggle to understand them. When Automobiles first started gaining popularity, Britain passed the Locomotive Act of 1865, which limited automobile speeds to 2 mph in towns and cities and 4 mph in rural areas. The cars also had to be led by a man carrying a red flag. The flag bearer literally had to walk in front of the car to warn pedestrians and horse drawn carriages that the car was coming.
More recently, the government and free speech activists went to battle over pornography on the internet. Not understanding how the internet works, lawmakers in New York passed Senate Bill 210E. It prohibited the transmission of content “harmful to minors” to any minor, from any state or country. The obvious problem was that site owners have no way of knowing if the user on the other end is a minor or an adult. The courts ruled that the law unconstitutional the same year it was passed after the American Liberties Association challenged it.
The DCLDC is a completely separate entity from Coin Center. It does include two Coin Center members, Executive Director Jerry Brito and lawyer Peter Van Valkenburgh. They hope the DCLDC will defend decentralized technologies like the ACLU and the EFF defended the internet.
“The early internet could not have reached the kind of global scale we see today without the work of motivated entrepreneurs and tinkerers[.] Historically, defense coalitions similar to the DCLDC have played a key role in keeping the way free for innovators pushing the envelope to build out promising network technologies” said Brito.
Cryptocurrency regulation has been an issue for the space for years. Ever since Senator Charles Shumer (D-NY) called for the shut down of the Silk Road, Bitcoin regulation has been an issue for lawmakers. While regulation of some form or another is coming eventually, organizations like Coin Center have been fighting to make that regulation as favorable to the industry as possible. Now, the DCLDC will be working to help people and companies deal with that regulation, regardless of what it might entail.
DCLDC will provide pro-bono (free) legal advice for those who can’t afford it. The DCLDC will also issue amicus briefs in cases that could set precedent. Amicus briefs are comments to the court from a group that has not been called as a witness by either party.
You can learn more about DCLDC and how to contact them, on their website.
A quick and unrelated note for our longtime readers. Inside Bitcoins is hosting a conference in New York City on October 8th. While it will be going on the same day as Scaling Bitcoins in Milan, Italy, it has a different focus. The Cryptocurrency Pub Con is designed to be accessible to people not actively working in the industry. We have a great line up of speakers, including yours truly. Industry focused conference tickets are often priced in the hundreds of dollars. The Cryptocurrency Pub Con tickets are only $10 if you buy in advance and $20 at the door. It will take place at the Turtle Bay NYC restaurant and bar. It is located at 987 2nd Ave, New York, New York.
We hope to see you there. I will have signed copies of my book for sale as well.
[Image: Inside Bitcoins]
Decentralized Applicatoins Fund Managing Director David Johnston conducted a fireside chat with Shapeshift.io CEO Erik Voorhees at the Texas Bitcoin Conference in late March, and an interesting exchange between the two long-time Bitcoin proponents took place when the topic of Coinbase came up. While many in the Bitcoin community have been critical of Coinbase for shutting down user accounts and going the extra mile on regulatory compliance, it appears that both Johnston and Voorhees understand where the Bitcoin exchange and wallet provider are coming from. Johnston initially made some comments on Coinbase before Voorhees added his two cents:
“Some people have been critical of Coinbase . . . But in truth, I agree, it’s a very convenient service. If you’re willing to risk having them hold your keys — I wouldn’t personally do that — you have that option. And if they break that trust, you have that option to leave.”
Coinbase More Intrusive Than Banks?
When Voorhees began to share his thoughts on Coinbase as a major player in the Bitcoin space, he first pointed out why the company receives so much criticism from certain members of the community:
“With Coinbase, they get a lot of flack from the community. And certainly, they’re more intrusive than many banks if you’ve ever dealt with them, especially as a merchant. They will ask you what you’re actually doing with the money. Banks don’t really do that.”
Coinbase Has a Target on Their Back
Of course, the reason that Coinbase goes above and beyond on regulatory compliance is that they’re one of the most prominent companies in the space. Regulators undoubtedly have a bullseye on Coinbase because that is where so much Bitcoin-related activity takes place. Voorhees explained this point during the discussion:
“It’s easy to hate on them, but you have to understand that they are like the biggest target from the regulator’s perspective. They are the company after which the banks are going to attack with every piece of regulation that they can. So, they have to be extremely paranoid, and they have to do more than compliance.”
Bitcoin Needs Coinbase
Although many like to claim that Bitcoin does not need any of the companies that are built on top of the base protocol, the reality is the various exchanges, banks, payment processors, and other businesses built on top of the platform are extremely helpful in fostering more adoption of bitcoin as a currency. Voorhees noted the importance of Coinbase to the ecosystem in his comments:
“They’re a very important piece of the ecosystem. They’re one of the bridges that allow people to easily move from the fiat structure into the decentralized cryptocurrency structure. In the future that I think we’re all envisioning, there may not be many needs for what Coinbase does now, which is interface with the banks because the banks may not be there to interface with. And that would be great, but for now, we need companies like that. And they need to do whatever they need to do to stay in operation and to stay out of jail. If they’re being too onerous for you, which is understandable, just don’t use them.”
As David Johnston noted in his initial remarks on Coinbase, the great thing about the exchange and wallet provider is that they’re there if you need them. The great thing about Bitcoin is that you can always exit centralized hubs, such as Coinbase or Circle, and move your coins back to the blockchain. Many Bitcoin users like to take care of their own private keys, but it’s going to be quite a long time before the general public is ready to take care of their own security.
Featured image via Texas Bitcoin Conference.
Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, RT’s Keiser Report, and many other media outlets. You can follow @kyletorpey on Twitter.
The final version of the BitLicense was formally announced by New York Department of Financial Services Superintendent Ben Lawsky yesterday, and the bitcoin community has had a bit of time to take a look at the new regulations and share their opinions on Reddit, Twitter, and every other form of social media. Although the general view of the BitLicense from the bitcoin community has been rather negative over the past year, some individuals have noted that the final version of the regulatory action seems to be an improvement over earlier drafts. Having said that, the bitcoin-focused organizations that talk with lawmakers and regulators on a regular basis did not seem impressed by the new rules that have come out of New York.
Chamber of Digital Commerce sees room for improvement
In a statement shared with Inside Bitcoins via email, Chamber of Digital Commerce President Perianne Boring seemed concerned with the current regulatory environment surrounding bitcoin and other digital currency applications. Boring wrote:
“New York’s final BitLicense regulations are not perfect. The most concerning is that there is not a clear on-ramp for start-ups and small businesses. And we can expect that other states will use BitLicense as a guideline in putting forward their own regs.”
In addition to worrying about the effect New York’s BitLicense could have on other jurisdictions, Boring also called for more individuals and organizations to get involved in the regulatory conversation:
“It is imperative that the industry’s voice is heard in discussions among policymakers to ensure what ultimately becomes law does not impede innovation. It is going to require the participation from all areas of the digital asset community (companies, individuals, investors, universities and other advocacy organizations) to put together a legal framework that best serves the ecosystem – one that fosters innovation, jobs and investment. Without proper engagement we risk a patchwork of inconsistencies and friction between local, state, federal and international laws.”
Boring also noted that the Chamber of Digital Commerce is still reviewing the regulations and they will provide more in-depth analysis at their next membership meeting on June 16th.
Summary of bitcoin community’s reaction to the final BitLicense: “meh” #honeybadger
— Barry Silbert (@barrysilbert) June 3, 2015
Coin Center: New York BitLicense falls short
According to a blog post released in the hours after the official BitLicense announcement, Coin Center Executive Director Jerry Brito has mixed feelings on the final version of the new rules for digital currencies. On the one hand, Brito admitted that “the language we see here is improved from the original proposal.” However, he went on to say:
“Yet the final BitLicense is far from perfect. Despite the changes to anti-money laundering requirements that the superintendent cited in his speech, the final Bitlicense still creates an unprecedented and discriminatory state-level AML reporting obligation. The new language is vague and unclear about how compliance with federal regulations will exempt a BitLicensee from those state-level obligations. My question is, if you register with FinCEN, do you have AML obligations to New York State?”
Much like Chamber of Digital Commerce President Perianne Boring, Brito seemed concerned about other states following the bad example that has been set by the State of New York. He added, “We are working with them to ensure they do not repeat the mistakes made here.” Coin Center’s Peter Van Valkenburgh and Jerry Brito have also published their own regulatory framework that they’d like to see state regulators use as a guide when drafting their own digital currency rules.
Bitcoin Foundation Executive Director Bruce Fenton is not pleased
Although the Bitcoin Foundation is no longer involved with public policy related to bitcoin, the non-profit organization’s executive director, Bruce Fenton, still let his voice be heard on Reddit. In response to one Redditor who noted, “[The] application fee is only $5,000,” Fenton commented:
Fenton’s main gripe with the BitLicense seems to be related to his contention that “someone could be prosecuted for violations of BitLicense with no victim.” Perhaps these views should come as no surprise when factoring in Fenton’s political beliefs. Of course, it should again be noted that the Bitcoin Foundation is currently focused on Bitcoin Core development rather than politics or regulations.
The main thing to watch now is to see if other jurisdictions around the world decide to follow New York’s lead on digital currency regulations. The Chamber of Digital Commerce and Coin Center have both pledged to work closely with lawmakers and regulators to make sure that the digital currency community’s desires are at least part of the conversation.
Featured image via Sam Valadi.
You can follow @kyletorpey on Twitter.
Although most bitcoin users have been concerned with regulation in terms of how it will stifle innovation and prevent new startups from launching in certain jurisdictions, one of the key elements of the proposed regulations in New York and California could impact the digital commodity’s P2P nature. While we’re not at the point where regulators are making pull requests on GitHub, it appears that trading a small amount of bitcoin for cash could require a license in the near future. A few states are mulling over such regulations right now, which could have a negative impact on peer-to-peer exchanges such as LocalBitcoins.
The language in California and New York
A bill that was recently approved by the California Assembly Committee on Banking and Finance contains some language that could be troubling for individuals who like to trade bitcoins for cash, bank transfers, PayPal, or other means of payment. The bill explains that anyone who wishes to operate a “virtual currency business” must follow a specific list of rules and regulations, which includes applying for a license to operate as a virtual currency business in the state of California. One of the types of virtual currency businesses described in the bill involves:
“Providing conversion or exchange services of fiat currency into virtual currency or the conversion or of exchange of virtual currency into fiat currency or other value, or the conversion or exchange of one form of virtual currency into another form of virtual currency.”
In other words, your friend who is always willing to sell you some bitcoins or buy your bitcoins may need to apply for a license after this bill is passed.
In New York, somewhat similar language can be found under the definition of “virtual currency business activity” in the proposed BitLicense. One type of activity found in the BitLicense describes anyone “performing exchange services as a customer business” as someone who is involved in virtual currency business activity. Furthermore, “exchange services” are defined as:
“The conversion or exchange of fiat currency or other value into virtual currency, the conversion or exchange of virtual currency into fiat currency or other value, or the conversion or exchange of one form of virtual currency into another form of virtual currency.”
The case of Michel Espinoza
Although regulations will vary from state to state, one case that everyone in the bitcoin community should be watching involves Michael Espinoza’s sale of bitcoins in Florida via LocalBitcoins.com. State Attorney Katherine Fernandez Rundle has described Espinoza’s case as what “may be the first state [prosecution] involving the use of bitcoins in money laundering operations.” Michel Espinoza and his attorney, Rene Palomino, were recently interviewed by Chris DeRose on his YouTube channel, and Palomino explained the current reality of trading bitcoin in a peer-to-peer manner, at least in the State of Florida. After DeRose described the common activity of selling a friend anywhere from ten to a few hundred dollars worth of bitcoin, Palomino stated, “Under the eyes of the State of Florida [and] Dade County’s State Attorney’s Office, you have all committed a crime.” Palomino also noted (when referring to Espinoza’s case), “It could have simply been anybody who owns bitcoins and wanted to sell the bitcoins.”
Palomino also touched on the fact that many states and federal agencies are starting to refer to bitcoin as a commodity or personal property. This seems to be at odds with at least one of the charges in Espinoza’s case in Florida as that particular charge is related to currency law. As Palomino noted, “[If Espinoza had been selling gold], it would not have been worth [the State of Florida’s] time. He’s selling his gold. It’s personal property. Everybody knows that gold is personal property.”
The real answer will come in time
I was able to ask Chamber of Digital Commerce President Perianne Boring about this issue of P2P bitcoin exchanges during the Q&A session of her recent presentation at the Inside Bitcoins conference in New York City, and she seemed to indicate that the current regulatory landscape is unclear at best. Boring noted:
“I would encourage you to seek legal council if you’re involved in those activities because it’s very difficult for anybody engaging in the business of bitcoin to ensure that they’re not violating these rules . . . For those wanting to get engaged on the peer-to-peer side, it’s absolutely difficult because potentially you have to pay a $250,000 bond to a state to do a $10 transaction.”
What we could eventually see from legislatures and regulators is an exchange cap for P2P traders that allows individuals to buy or sell minimal amounts of bitcoin without registering with the state or a federal agency. Having said that, Boring’s encouragement for LocalBitcoins users to seek legal advice at this time should be taken seriously. The real answer to this question will come in time, and the current regulatory environment should indicate that it’s best to play it safe with P2P bitcoin trades for now.
As a final note, it should be remembered that the actual P2P exchange platforms are another area of attack for regulators. For example, LocalBitcoins restricted use of their platform in Germany last year due to “regulatory reasons.”
Featured image via Zach Copley.
You can follow @kyletorpey on Twitter.
Bitcoin Investment Trust Creator Barry Silbert joined American Banker Editor-in-Chief Marc Hochstein for a fireside chat at the Inside Bitcoins conference in New York City on Wednesday, and the serial investor in bitcoin companies shared a few interesting notes about the future of his publicly-traded vehicle for investing in bitcoin. In addition to claiming that Bitcoin Investment Trust (OTCQX:GBTC) trading could start as soon as today or tomorrow, Silbert also expanded on his future ambitions for the first publicly-traded bitcoin fund.
GBTC trading can start today
Silbert used the first few minutes of his time on stage to answer some questions he had heard while he was walking around the conference halls earlier in the day. He started off by saying:
“Everyone wants to know when they can start trading — this is the Bitcoin Investment Trust, symbol GBTC. There were many, many steps along the way to be a publicly-traded vehicle, and I’m very proud of my team and all of the lawyers that got it done. But, we’re done. So essentially on Friday last week we sent out instructions to all the shareholders who have held for twelve months, and [explained] how to deposit shares into the brokerage accounts. That process — if you act fast, if your broker doesn’t sit on it — it can be 24 hours. So, we have no reason to believe we won’t start seeing trading — I don’t know if it’ll happen today — but it could happen tomorrow, but obviously we don’t have any control over it.”
As of today, there hasn’t been a single trade of GBTC, and it’s up to the shareholders to decide to sell on the market before any trades can take place. At this point in time, it seems that no shareholders of the Bitcoin Investment Trust are in a rush to sell their shares.
Bitcoin Investment Trust may eventually trade on NASDAQ or NYSE
Although Silbert noted that he has publicly stated his intentions for the future of the Bitcoin Investment Trust in the past, he felt that his desires were simply not understood in the overall bitcoin community. For this reason, he went on to state:
“Our plan is to have [the Bitcoin Investment Trust] listed on either NASDAQ or New York Stock Exchange as fast as possible. We have selected a law firm to go through the registration process with us, and we intend to file with the SEC . . . as soon as possible. We will then be in the same boat as the Winklevoss brothers.”
Unlike the Winklevii’s version of a publicly-traded vehicle for bitcoin, Silbert’s Bitcoin Investment Trust is beginning its life cycle on an OTC market. The Winklevoss Twins are currently waiting for their offering (NASDAQ:COIN) to be publicly listed.
Who will be trading GBTC?
In addition to providing his own updates on the status of the Bitcoin Investment Trust, Silbert also answered a question from Hochstein in regards to why someone would want to use that particular investment vehicle in the first place. Silbert explained a variety of different reasons as to why someone may want to buy shares of GBTC instead of their own bitcoins:
“We’re catering towards a group of investors — some of which are not tech savvy, some which are lazy, some which can’t actually go buy bitcoin. The amount of capital that’s sitting in institutional hands that wants to invest in bitcoin is pretty significant, but whether it’s their auditors or internal policies — they just can’t buy bitcoin. Being able to buy publicly-traded shares in a vehicle that’s audited by [an independent public accounting firm] is something that’s possible for them. So I think we’re going to see a lot of interest from the institutional community, from mutual funds that need to have exposure to emerging technologies — you know, bitcoin is one of those, so we could certainly see interest from there. And the area where we seem to be getting a lot of interest is retirement accounts. So — if you have an IRA or 401(k) where you can direct it into stocks, as far as I know, this will be the first way you can invest in bitcoin.”
Although the core bitcoin community that has been involved in this new technology since the early days will probably be wary of a system that does not allow them to control their own private keys, the Bitcoin Investment Trust could be useful in bringing new long-term holders to the digital commodity.
You can follow @kyletorpey on Twitter.
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Article by Natalie Johnson
The Chamber of Digital Commerce will host an Anti-Money Laundering (AML) Compliance Bootcamp for Digital Currency in New York City on April 30 – May 1, 2015. On May 2, a separate AML Program Drafting Workshop will be held as well. The bootcamp and workshop are meant to provide education on AML and OFAC compliance specifically for bankers and professionals in the digital currency industry.
The Chamber of Digital Commerce is an authoritative representative for digital currency in Washington, DC. The non-profit organization has made it their mission to promote education and acceptance of digital currency to both the public and government.
AML Compliance Bootcamp Objectives:
- Assemble framework for building or enhancing AML compliance programs.
- Learn how to meet the expectations of regulators (IRS, SEC, state money transmitter regulators, and etc) and banks.
- Prepare for your next AML compliance review, whether conducted by your bank, a regulator or an auditor.
AML Program Drafting Workshop
The day 3 workshop will take a more hands-on approach. Attendees will work with their peers to apply information learned from the bootcamp.
This optional workshop will help prepare people to handle everyday compliance situations.
Who the Bootcamp is For
- Payments Professionals
- Auditors and Independent Reviewers
- Others interested in all digital currencies
Why the AML Compliance Bootcamp is Important
AML compliance for bitcoin is a new territory for bankers and professionals, one that is complex yet must be understood to maintain
regulatory compliance. The bootcamp is important not only to educate on AML compliance, but also to provide awareness on risk management and issues facing digital currency companies. If companies develop a better understanding of these aspects, the Chamber believes that banks will be more willing to provide their services.
The bootcamp meets federal training requirements and has been approved for continuing education credits by ACAMS, CLE, CSBS, DCC, and others.
The Chamber of Digital Commerce is now accepting grant applications from bankers to attend the program. Two grants to cover tuition will be awarded by the Chamber of Digital Commerce to select bank or credit union employees who apply.
Any person who wishes to attend the bootcamp should complete their application with the Chamber of Digital Commerce. Apply or find out more information on the AML Compliance Bootcamp by visiting DigitalChamber.org.
Will you be attending the AML Compliance Bootcamp? Let us know in the comments below!
Image courtesy of the Chamber of Digital Commerce.
NEW YORK (InsideBitcoins) — New York Department of Financial Services Superintendent Ben Lawsky is well-known in the bitcoin community due to his creation of the BitLicense, but in fact he has to deal with much more than just cryptocurrency during his normal working hours. Lawsky delivered some remarks at Columbia Law School yesterday, and his three main areas of focus were Wall Street accountability after the financial crisis, the prevention of money laundering, and cyber security.
The most interesting aspects of Lawsky’s remarks came while he was discussing accountability for financial crimes. It was during this part of the talk that the superintendent made it clear that regulators should be targeting individuals rather than corporations if they want to scare the banks straight.
Mortgage fraud deserved more forceful response
When Superintendent Lawsky began talking about accountability for financial crimes and fraud, he quoted senators and former treasury secretaries who seemed to agree with the notion that there has been a lack of repercussions for white collar crimes committed on Wall Street. He quoted former Treasury Secretary Larry Summers, who pointed out the “almost total absence of successful prosecutions of individuals.” Lawsky also relayed Senator Richard Shelby’s concerns that Wall Street executives were trying to “buy their way out of culpability” through the use of big fines paid by their financial institutions.
The point Lawsky was attempting to make is that punishing a bank does not do much to deter financial crime when the individuals behind the actual wrong-doing get to walk away scot-free. As former Treasury Secretary Timothy Geithner put it in reference to the financial crisis, “[The American people] deserved a more forceful enforcement response than the government delivered.”
Going after individuals
The obvious solution to this problem would seem to be targeting individuals at financial institutions rather than the financial institution itself. In reference to filtering systems that are created to prevent money laundering, Lawsky stated:
“Since we cannot simultaneously audit every institution, we are also considering making senior executives personally attest to the adequacy and robustness of those systems. This idea is modeled on the Sarbanes-Oxley approach to accounting fraud. We expect to move quickly on these ideas and – to the extent they are effective – we hope that other regulators will take similar steps.”
Lawsky often comments on the use of money laundering to finance terrorism as perhaps the largest problem facing financial institutions, and it’s the main issue that he often brings up in reference to bitcoin and other cryptocurrencies. Yesterday’s prepared remarks did not deviate from this trend, as Lawsky noted, “Money is the oxygen feeding the fire that is terrorism. Without moving massive amounts of money around the globe, international terrorism cannot thrive.”
Whoa: @BenLawsky "considering making sr execs personally attest 2 adequacy, robustness of [AML txn monitoring/filtering systems" a la SarbOx
— It’s Marc with a “c,” son (@MarcHochstein) February 25, 2015
Another reason for bitcoin entrepreneurs to avoid New York?
Bitcoin entrepreneurs are already not too excited about the BitLicense. As Andreas Antonopoulos recently put it, “Give it a month and New York will be a wasteland in terms of bitcoin innovation because it will be deserted as soon as the BitLicense starts up[.]”
At this time, it’s unclear if these new safeguards against money laundering at financial institutions would also apply to bitcoin companies. Although he was convicted at the federal level, it would seem that this sort of philosophy already applies to the Charlie Shrems of the world. Most bitcoin entrepreneurs understand that they already need to overpolice themselves during these early days of regulatory uncertainty, but it’s unclear if they’d be willing to put their own necks on the line for the privilege of operating in the state of New York.
— Bruce Fenton (@brucefenton) February 25, 2015
Whether individuals or corporations are targeted, it seems clear that what the general public desires more than anything else is consistency with how the rule of law is applied to different types of people.
Of course, many of the early bitcoin adopters probably don’t believe that money laundering is a crime in the first place, but that’s a different discussion.
You can follow @kyletorpey on Twitter.
NEW YORK (InsideBitcoins) — The news was punched with a big headline on its blog: “Coinbase Launches First Regulated Bitcoin Exchange in the U.S.” The post went on to explain, “If you are a Coinbase user in one of the 24 supported U.S. states or territories you can begin trading immediately on Coinbase Exchange.”
The Wall Street Journal, who broke the story of the exchange’s launch, said “Coinbase’s founders have been working for five months and have received regulatory approval in half of U.S. states, including New York and California.”
But New York State Department of Financial Services Superintendent Benjamin Lawsky has since flatly stated that Coinbase has no license to operate in the state. And California issued a consumer alert, saying “The California Department of Business Oversight has not decided whether to regulate virtual currency transactions, or the businesses that arrange such transactions, under the state’s Money Transmission Act. California consumers should be aware Coinbase Exchange is not regulated or licensed by the State.”
The Wall Street Journal story has since been corrected and now Coinbase is backtracking, telling Inside Bitcoins that it actually has “14 licenses, 8 (states where) Coinbase received notification that they don’t need one (at least yet, could change over time)” and “2 (states) in the grey zone (NY and CA) – e.g. these states are working on their own bitcoin regulations (like NY Bitlicense), but in the meantime Coinbase has contacted regulatory bodies who are aware of the exchange.”
Inside Bitcoins asked a Coinbase principal to respond to these questions:
- Was the original announcement misleading, a mistake or an oversight?
- How can a firm claim to be “regulated” when in fact eight jurisdictions don’t even regulate a bitcoin exchange — and the two largest, CA and NY are only “aware” of the exchange?
The company declined to comment.
“It seems like Coinbase received pressure from investors to hack together an exchange quickly and enter the market with an attractive headline.”
Meanwhile, the CEO of New York-based bitcoin exchange Coinsetter, Jaron Lukasiewicz, pulled no punches on what he believes happened.
“It seems like Coinbase received pressure from investors to hack together an exchange quickly and enter the market with an attractive headline,” Lukasiewicz told Inside Bitcoins. “They did receive press from it, but most industry insiders don’t view this as much more than a misleading announcement.”
Now Tripp Levy PLLC, a securities and shareholder rights law firm, is chasing the Coinbase ambulance, saying it is investigating the company “for allegedly making false and misleading statements to prospective and current users of Coinbase’s Bitcoin Exchange regarding its business.”
NEW YORK (InsideBitcoins) — New York Department of Financial Services superintendent Ben Lawsky has revealed some of the specific changes to the BitLicense proposal which are set for release to the public for comment within days. In a keynote address to the Bipartisan Policy Center in Washington this morning Lawsky detailed some of the revisions to the statute, based on public input:
- Record-keeping requirements would be reduced from 10 to seven years
- Startups would receive a two-year waiver from full compliance
- Assets held in virtual currencies can be counted toward capital requirements
- Eliminated the requirement for licensees to obtain address and transaction data for all parties involved in a transaction.
“I think you will see Wall Street rushing into this.”
The superintendent also clarified that the BitLicense law will not apply to merchants accepting cryptocurrencies as payment, bitcoin miners, software developers or to companies that issue digital value in the form of rewards and gift cards.
Meanwhile, in a interview on the Arthur Levitt podcast on Bloomberg radio yesterday, Lawsky showed bitcoin a little love, saying “If we can put some parameters, regulatory parameters, around virtual currencies that, on the one hand, don’t stifle innovation but, on the other hand, allow the larger banks to have some comfort that we’re watching out for money laundering, I think you will see Wall Street rushing into this.”
Listen to the comment below: