Industry Reaction to the latest BitLicense proposal has been lukewarm, the general consensus being that while it has made progress, there is still room for improvement.
The new proposal was released by Benjamin Lawsky, the Superintendent for the New York Department of Financial Services (NYDFS), following a feedback period on the initial draft that garnered over 3,700 comments.
One area of concern has been its treatment of startups. No clear rules were delineated–the exemption of startups from licensing requirements is instead subject to the NYDFS superintendent’s discretion. The positive of such ambiguity is that it does not overburden the policy with another set of complex rules, but new entrants might be wary of relying on Lawsky’s discretion to get their business off the ground.
Barry Silbert, CEO Digital Currency Group, said the new proposal is a “step in the right direction, but there is still work to be done” as it continues to place “significant burdens on digital currency firms of all sizes without a clear ‘on-ramp’ for startups.”
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Circle CEO Jeremy Allaire also said the revisions are a step in the right direction, but he took issue with the “onerous” requirement for licensed businesses to report any new product feature or management change. This can be especially difficult for startups:
“This cuts deeply against the grain of agile, internet based software innovation, and is nearly inconceivable. Internet technology companies deploy new features into products on a daily or weekly basis.”
The latest policy did exempt software developers from licensing requirements, but remains vague on mining activities. At face value, miners may meet the condition of “controlling, administering, or issuing a Virtual Currency” as delineated in Section 200.2.
David Berger, CEO of the New York-based Digital Currency Council, welcomed the provision for non-financial business activities built on blockchain technology. When only a nominal amount of digital currency is used for purely functional purposes licensing is not required.