Bitcoin Forum

New York’s New Bitcoin Rules Are Going to Kill Its Startups

http://www.wired.com/2014/07/ny_bitcoin/

Indeed exciting!

I don't believe there are any Bitcoin startups in NY and that likely isn't a coincidence.   The bad news is for NY residents.  Unless scaled way back many startups will simply not be able to comply.  That will leave residents of NY with less choices, more risk (unlawful entities), and higher costs.

NYC loss....when they see how much money they are loosening at 10~100~1000x today, they will likely change their tune.

also I note

"Bitcoin businesses must also file frequent reports to Lawsky’s organization"

typical bureaucracy trying to give itself more power and importance at the expense and cost of the taxpayer.

One thing the US does have going for it is the competing corporations laws inter state, which may allow much larger competition in seeking income.

Much like Delaware has quite good company laws and a purportedly excellent bench, so many companies like to incorporate their.

Further politicians are more than happy it seems to accept BTC funding. This may cause and advantage to BTC accepting politicians and thus force more to accept. They will find away from self interest to make it possible for them to get money/BTC.

Finally is it about time that some BTC candidates run from the community. I have found in elections that if even appear to take any sort vote, all of a sudden the front runner will contact you and they will cut a deal.

As tyrannical governments get more desperate we will see more desperate measures such as confiscating funds from banks that operate in countries deemed to be too weak on Bitcoin.

American exceptionalism knows no bounds.

I'd love to hear more about this process and what you think needs to happen.  :)

I have a feeling that the Bitcoin version of Silicon Valley and Wall Street won't be in New York, then. The way things are going, our hotbed of innovation is probably going to be on a seastead somewhere. Or maybe out in space where there isn't much in the way of government.

One hopeful (though overly optimistic, perhaps) thing to keep in mind is that this is a draft at the moment. With good fortune, maybe it won't come to fruition.

New York hasn't been a good State for any kind of business for a long time now. I think they're lucky to have Wall Street there, because they continue to drive business and innovation away from their State. It's only going to hurt them in the long run. Whichever State is first to publicly announce a Bitcoin friendly environment stands to benefit quite a bit, I believe. It's an industry in its adolescence looking to grow more and more; why not capitalize on that early in the game?

Good! i dont' want NY to be the center of bitcoin inovation anyway! last thing we need is bunch of wallstreet cunts running over to BTC land and loopholing the shit out of it.
go fuck yourself NY.

Totally agree.  By engaging in regulatory overreach all NY has done is make sure it is a laggard again in innovation and economic development.

Essentially we need a candidate(s) and political party to run for a legislature , either lower or upper house. Register party. Select candidate.

The party needs to have its policy set out which is kinda pre written in this forum.

Run in a  high profile jurisdiction like NYC state level or if you want federal.

Whatever legislature this regulation NYC guy's works for would be good.

At that point your independent can be BTC funded.

deals can then be brokered and BTC is the boss of regulation.

given the right platform...there is enough BTC out there to really fund our political party.

if successful BTC wins....rinse repeat in other jurisdictions.

Not just the startup company. It will kill its value also.

newyork is the hotbed of bankers (wall street)
this was expected to happen
lets hope silicon valley wisens up and dont follow their lead

So, if a company is headquartered out of another state, do they not need to follow these proposed regulations?
Or, is it any company operating a business that does bitcoin transactions (sends their products, sells their app, etc) in New York, regardless of where they are headquartered, required to follow these regulations?

WTF???? Is the guy who wrote that article a complete dumb-ass ????

what he should write in my opinion is this


but then again maybe he is controlled by the immoral bankers ...

Normal logic says only those who resides in NY .... but who know how the hell they will change the rules ....

There is also a danger that other states follow the NY model. It won't affect regular users much but it raises serious entry barriers for exchanges to do business with NY residents.

well west was always different than east .... just go to cali and there you can live only with BTC :)

Hmm ironic how two ends of the US have opposite view on btc. California just legalized btc with none of these strict regulations, while New York wants heavy regulation. We're in the age of rapid development for crypto, so I wonder what the other state's stance will be.

CA is looking to create a "bitlicense" NY just beat them to the punch.  Also CA only "legalized" Bitcoin because they previously passed a law which made issuing and circulating virtual currencies illegal.  It would be like if CA accidentally passed a law which made hamburgers illegal and then corrected it by repealing that statute.  I doubt you would consider CA to be  pro hamburger.

If you want to look at how punitive the various states will be just look at their existing MSB licenses are and when they passed them.  NY and CA were both first movers in setting up licensing and they both top the list with massive regulatory overhead.  CA maximum bond requirement for "traditional" money transmitters is $7 million.

It's only a draft/proposal at this point, right? Still open to public comment, and changes? Hopefully the bitcoin community and business/financial community can lobby for some more business-friendly regs.

NY regulation is a joke.

We will not comply, nor will we comply with Canadian regulation nor any other kind of regulation - PERIOD.

More regulation = less innovation = more monopolies = more government control of the money supply.

That's what I've heard, anyway. Let us pray.... :-\ I'm afraid that if this is what it looks like in NY, that this what it will look like on the federal level eventually as well.

People will comply, even the hardest ones;that is the power of gouvernment.
They will have it their way, one way or the other, and by refusing their regulations we might see even more banks accounts linked to bitcoin closed.
That would further tear down the price, and force potential investors away.

The proposed new regulations will only apply to companies that process bitcoin payments on behalf of customers and to companies that hold bitcoin on behalf of their customers (mainly exchanges). This is suppose to prevent another MtGOX from happening again.

I am sorry for play "the devil's advocate" but every business runs better with "rules and regulations".

BTW,

BitLicense Regulations Forked on GitHub by Bitcoin Community

Following the BitLicense announcement on Reddit, Bitcoin Foundation General Counsel Patrick Murck created a .5 BTC bounty for the first person to upload the complete text of the BitLicense regulations to GitHub for the community to edit.


http://www.cryptocoinsnews.com/news/bitlicense-regulations-forked-github-bitcoin-community/2014/07/19

It seems to me that businesses run better with free competition and "less" government.

You can have both, they're not mutually exclusiveexclude clause. An analogy is a basketball (or any other ) game, you have a book of rules and competition.

or (for people involved more directly with computing science ) is like

compiler construction

http://en.wikipedia.org/wiki/History_of_compiler_construction (http://en.wikipedia.org/wiki/History_of_compiler_construction)   

 ;D

Ouch, I was really looking forward to these regulations coming out, but this sounds a bit ominous. None of this is already set in stone, is it? I hear mention of CA... have any drafts come out from there?

Fly away my little start-ups! Fly to other states and countries!

God damn. I actually feel lucky that I'm Canadian, in a completely "American-minded" way!

Just to let you know, it can get much worse if the United States of Leviathan get a'juggernauting our way. Once of my secret fears revolves around the mighty U.S. Congress getting the idea in its head that using an 'umble anonymizer service should be considered obstruction of justice (a felony.)

The NY regulations are still in the draft phase and the regulator is soliciting comments from the public.

IMO these regulations are good for bitcoin over the long term as they only apply to exchanges and payment processors, and in simple terms only make exchanges hold sufficient bitcoin in reserve to cover all of their customer's deposits. The regulations also subject exchanges to audits to make sure they are complying with the above requirement. I would argue that the regulation would make it less likely that we would encounter another GOX type situation. 

In that case, it would be far more reassuring if the drafter sounded like he wandered in from the Securities and Exchange Commission rather than from the U.S. Department of Justice.

Speaking of securities regulation: as part of my slew of responsibilities as part of the dev team for the Nxt clone NFD (http://www.nfdcoin.com/), I bought a complete, ~3,500 page paper copy of the complete securities regulations of my home domicile of Ontario, Canada. Carswell Publishers (Thomson-Reuters) was good enough to later send me an updated copy of the same book as part of my "subscription." Real masochists lug paper.  :)

What was worrying me was how Nxt's (and NFD's) "Asset Exchange (http://www.nxtcommunity.org/nxt-asset-exchange)" would look to an Ontario Securities Commission enforcement officer if he or she found out about it.

I was disappointed, but not really surprised, to see that the Ontario legislation's definition of "security" was so broad that a clever accountant could argue that good ol' "Canadian Tire Money (https://www.google.ca/?gws_rd=ssl#q=canadian+tire+money)" is a security. Inventory, or goods available for sale, is (of course) a current asset.

Now, Canadian law has a buzzword - "reasonable" - that Canadians in the law take seriously. If some intrepid accountant lodged a complaint about Canadian Tire money being an out-of-bounds security, an OSC enforcement officer would congratulate him for being clever but would end with: "of course, you're being unreasonable." And then, the officer would joke about it in private with his or her colleagues. :)

But something like the "feeshare" - a grey-area legal gimcrack something like a permanent prepaid lease on a house, only it's supposed to be a grey-area not-quite-a-common-share - would get an enforcement officer's serious attention. And not in a good way.

That's not a worry in the NFD nano-world, at the moment, but it's a big worry for the Nxters. The listings of the Nxt Asset Exchange (http://www.mynxt.info/blockexplorer/assets.php) are chock-full of feeshares. I know for a fact that one of the issuers is domiciled in Ontario, Canada. The name escapes me - damn my rickety memory.  ;)

What does this have to do with Bitcoin? Simple. If the Bitcoin world comes up with a Bitcoin-centered suite of Crypto 2.0 solutions, like an Asset Exchange, the legal fate of Nxt's is going to be very relevant to Bitcoin. In this sense, Nxt and its offshoots are a kind of advanced expeditionary force for Bitcoin. If the Nxt AE gets slaughtered in court, Bitcoiners will know that an Asset Exchange is a no-go. On the other hand, if Nxt's AE survives and you come across Nxters doing a victory-parade kind of happy dance, you know that some kind of Asset Exchange is more-or-less legally safe for Bitcoin itself.

In this sense, Nxt and its offshoots are "good" altcoins in the old-school sense. They're serving as pilot plants for the Bitcoin world and the crypto world in general.         

I'm not quite sure of the accuracy of my info but back in the 70's I think Citibank or some bank with Citi in their name moved out of New York into the state of Dakota...can't remember if its North or South. The reason being was that NY had too much regulations that affected one of their service offering...That was VISA credit card service I believe. I see the same parallels with bitcoin. Back in the 50's no one wanted anything to do with a piece of plastic called a credit card, merchants wanted cold hard cash.

Note: I can't remember the details clearly but if you look it up there is info out there.

I think the theory that the whole proposal just being a 'foot in the door' is interesting. They post those restrictive rules only to publish the
'real' rules afterwards and everybody will be happy that they've been relaxed! Talking about human psychology!

I guess the main offense is, who is New York to regulate Bitcoin? They didn't make it. They don't own it. It's not theirs. It belongs to the world, not to any one state or country or government. Is the rest of the world going to follow New York? Highly unlikely. So who cares if New York tries to slap regulations on Bitcoin? Bitcoin is much bigger than New York. By trying to regulate it, they are simply limiting themselves. People will use it freely in every other place, and New York will be excluded.

Well, a state, city our country can only try to put rules in place they think will benefit their companies and citizens the most. If they devise rules they think are suitable for companies dealing with bitcoin, they can just do that. It's their task to provide a legal framework for companies operating in their state, after all. If you don't want to do business there, just don't do it then, I guess :)

Do you believe these rules were made to benefit companies and citizens? How so?

I'm not saying anything about the concrete rules that have been published regarding bitcoin. I'm just saying that a government may opt to put rules in place to protect their companies and citizens. Maybe the NY government believes those rules need to be put in place in order to avoid bankruptcies, scams, or whatnot.

The rules are meant to make it so, over the long term it will be easier to deal in bitcoin as consumers will have confidence in the financial strength of the exchanges.

New York and California are not doing anything to Bitcoin that they don't do to every business. They are major economic players and they regulate all commerce to death. People don't start a business there because they want a regulation free environment they go to New Mexico for that. Hell, in New Mexico you can all but rape your employees, pay them minimum wage, provide no benefits, fire them at will for no reason, buy business zoned land for pennies on the dollar, pay no property tax, no business tax, pollute the environment without repercussions all because the government is backwards and corrupt.

The bad news is there is almost no economy in backwards little corrupt states. You won't make a fraction of the money there that you will in California or New York because there are few people living there and they don't have any money to spend. Bitcoin businesses will comply with all the stupid regulations and open in New York and in California because that's where the money is and always will be.

Bitcoiners get all excited when big players like the Winklevoss, Dish, Dell, Overstock and the like endorse Bitcoin. These are real businessmen and they will play by the book. They will be successful because towers of regulation are not new to them. Small players will not easily enter the Bitcoin market any more than they can enter any other market. Welcome to the first steps of wide spread adoption.

Way to inject some realism into this. We sometimes forget, but the virtual world is aught but a gateway from and to the real world.

There are a lot of businesses that are started in CA, mainly tech companies. Most tech companies that were created in the late 90's were based in CA.

The regulations that NY is proposing is good for bitcoin in general as it will give consumers certainty that an exchange is not going to fail the day after they deposit bitcoin with them.

If I wanted to trust a centralized institution then I'd be using a regular bank.  If you do not hold your own coins and you lose them then it's your own fault.  It's unfortunate that so many people whom do not understand cryptos go crying to BBB and local government to clean things up.  You want bitcoin to be modeled after the traditional institutions?  Perhaps you don't understand why this technology is so groundbreaking.   ::)

Well, you're in luck. As it so happens, banks are specifically exempt from these proposed regulations.









You might ask yourself 'why?'

I am lucky to be not in NY, and I hope it will not spread to other states soon