Cryptocurrency brokerage ShapeShift has confirmed that it will stop servicing customers in New York, blaming the recently finalized BitLicense regulations.
The regulations were spearheaded by New York Department of Financial Services (NYDFS) superintendent Benjamin Lawsky. They would require any business transmitting digital currency to obtain specialized licensing if marketing to customers in the state. ShapeShift says the rules are “anti-competitive” and target “a wide swath of digital currency and blockchain-based financial firms, violates consumer protections and puts users at risk.”
The company cites the fact that such businesses would be forced to collect confidential user data, which can be stolen if their systems are compromised. ShapeShift CEO and Bitcoin entrepreneur Erik Voorhees, a vocal critic of Lawsky, the BitLicense, and Bitcoin regulation in general, said:
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“Identity theft is an epidemic, more costly to society than many other forms of theft and crime. It is pervasive because the antiquated financial system–based on credit cards and banks–only works when personal information is attached to your transaction. Bitcoin has finally solved this problem, by enabling 100% secure transactions without attaching your private information. Now, New York wants to mandate that consumers continue to be put at risk, even though technology has provided a solution to identity theft.”
On the decision to end service to New York, he commented:
“Since New York has mandated unethical and dangerous data collection of users, we have no choice but to suspend service to that territory. We hope other jurisdictions will be less reckless with the private information of their residents. Finally digital commerce can be safe, if only regulators would let it happen.”
Users visiting the site from New York will be redirected to another site, PleaseProtectConsumers.org.