The Bitcoin Foundation is wrong. Yes, they didn't get everything they want, but NY met more than halfway on compromising between regulation and freedom for cryptocurrency. The proposed regulations wouldn't affect the average bitcoin user or retailer at all. It wouldn't cause a fork in the chain either. It isn't going to get better than this, take the deal and move forward with expandinding bitcoin services in NY. Whining because you only got 90% and not 100% of what you wanted just looks childish.
I'm not sure the Bitcoin Foundation is whining, or even anyone aside from a small minority of the community. Most who are educated on the matter are instead hopeful of a better precedent to regulation of a groundbreaking new technology. Applying traditional post-911 USAPATRIOT ACT AML/ KYC to a first of its kind public ledger of value is at best shortsighted and not well thought out. There is the idea that NYDFS knows that this old format regulation is misfitted to this unprecedented technology and will make it incredibly difficult for new businesses without at least $5MM in working capital to flourish. Their mindset is probably that "we are the biggest financial hub of the world, and we can do whatever we want." I think what they will find is that the many decades of suppressed innovation to the archaic financial industry will come out with an exponential gusto thanks to the distributed nature of the increasingly interconnected world. The barrier to entry for innovation in this space shifted down by orders of magnitude, and developers and new businesses will seek to be located in the places of the world that allow them to flourish. They will choose to do business with jurisdictions that make sense financially, and if doing business with residents of the state of NY costs more than it is worth, then they will choose not to. Now if mammoth institutions can keep pace with the innovation of this distributed network and offer similar products, then I'm sure they will again choose to operate wherever it is profitable. They will surely have the capital to comply with NYDFS, but will it even be worth it? For some services, yes. For others, no.
One option companies will have is to price their services differently between users in different jurisdictions. Those without such intense and ill-fitting regulation will see the same services at a fraction of the cost. So, all of this "consumer protecting" "terrorism fighting" regulation is really doing is making everything more expensive and less efficient. This kind of overreaching regulation works in the old system that has incredibly massive barriers to entry. It doesn't work for a distributed ledger in a peer to peer world. If the NYDFS passes its regulation as proposed without significant amendment or complete overhaul, I think it will shoot itself in the foot, and slowly watch itself bleed its elite status as financial center of the world.
I'm curious to see London's move. Their history with Bitcoin has been more relaxed than the U.S. in general, and I wouldn't be surprised to see them try to take the reigns.
