The New York State Department of Financial Services announced revisions for its BitLicense framework, which was revealed to bitcoin companies last year. The regulation has a 30-day comment period before it is will be finalized then implemented.
The latest revisions still prompted some concerns from bitcoin companies, particularly the startups. According to Boost VC CEO Adam Draper, the information gathered from such companies must be limited and he launched a petition to gain more support for this proposal. In addition, he proposed that BitLicense should require the government to avoid using duplicate language already contained in federal law and that regulators should give their approval to innovation in the financial markets.
Bitcoin Companies React to BitLicense
Draper added that the startup costs for bitcoin companies would be driven higher in obtaining BitLicense, as this would require an initial $2 million outlay and roughly $1 million per year in maintaining costs. These would comprise expenses on hiring compliance officers, meeting reporting standards, collecting necessary information, AML/KYC expenditures and associated legal costs.
Other owners of bitcoin companies welcomed the recent revisions but maintained that it would leave startups at a disadvantage when it comes to these costs. “When I read the second draft, although much more thought through than the first, I felt that it would still be too expensive for startups to get through,” Draper said.
He added that regulation shouldn’t strike fear among bitcoin companies but rather encourage innovation and support growth. He argued that regulation should assist firms in creating more products and protecting consumers rather than restricting development.
According to Xapo, the revisions still leave BitLicense overly broad in scope. They mentioned that most of the application is left to discretion, which could then create more uncertainty. The company has requested for more clarification on certain terms and procedures. In addition, Xapo reiterated that it imposes an undue burden to bitcoin companies.