“Anyone in the crowd that does not think the BitLicense needs to be reformed?”
Not a word from the audience. Then, a few seconds later, laughter at the awkward silence.
But the question itself, posed by New York state senator Jesse Hamilton at a roundtable Friday, hinted that the controversial 2015 regulation may soon be revisited.
A bill to reform the regulation could be introduced “very soon,” State Senator David Carlucci told CoinDesk. “That’s why we wanted to do this hearing, to get some views before we propose legislation.”
Speaking after the two-hour event, Carlucci said that a report will be prepared cataloguing the problems identified during the roundtable he hosted with Hamilton, as well as some of the solutions that were proposed.
“We want to put that out there, circulate it and really figure out how we can make this license in New York state something that works for the residents of New York state and the state economy.”
And while the hearing didn’t produce any guarantees of reform, both senators expressed an openness to continue the dialogue, with more events of this kind planned for the coming weeks.
“We’re going to do this again in a month, month and a half from now,” Hamilton said.
But what is likely to remain is the animosity toward the BitLicense, as evidenced by the small but dedicated protest gathering outside just before the roundtable began, not to mention the grievances aired by the two dozen or so attendees.
Threatening to leave
“Abolish the BitLicense!”
That was Theo Chino, who has waged a years-long campaign against the regulatory framework, at the outset of Friday’s roundtable.
His sentiment – while perhaps not stated in the same terms – was nonetheless shared by the group of witnesses brought together to discuss the BitLicense, which was crafted by the New York State Department of Financial Services under former superintendent Benjamin Lawsky, and the subject of regulation of cryptocurrencies in the Empire State more broadly.
The department, which is now led by Lawsky’s successor Maria Vullo, was not invited to participate in the meeting, a spokesperson for the regulator said by email.
Among those taking a negative tack toward the BitLicense during his testimony was Will Martino, one of the co-founders of distributed ledger startup Kadena. He suggested that because of the particulars of the BitLicense, his company faces challenges that might eventually drive it out of the state altogether.
“We don’t transmit or exchange real digital currencies for our customers,” he remarked. “Kadena is a tech startup company. We’re not a financial institution. We don’t do [anything with money]. Because of the BitLicense, we might leave New York.”
Indeed, the argument that the BitLicense is overly burdensome for small companies including those with limited access to capital and legal resources – that want to work with the tech.
“For large [firms], the costs are coffee money, for a small business the costs are crazy,” said software developer Steve B. “The requirements are not practical.”
Lower the burdens, attendees say
Gilles Gade, chief executive of the New Jersey-based Cross River Bank, called for a kind of split between those working in the realm of cryptocurrencies and initial coin offerings and those working on broader applications.
“We need to divide bitcoin and crypto, the ICOs, the tokens, from blockchain,” he remarked. “There’s no reason the technologists need to be subject to overbearing licenses and that’s what’s hindering innovation.” That said, Gade conceded that “eliminating the BitLicense is not an option.”
Kevin Batteh, chief policy advisor for the Chamber of Digital Commerce, commented that it makes sense for some types of businesses – namely exchanges – to fall under a framework like the BitLicense. But he echoed that a one-size-fits-all approach is hampering the work of other companies that, in his view, are being overburdened.
“When you blanket it across the entire industry, that’s where you have a problem,” he said.
“It’s too early” to write new rules for the space, Llew Claasen, executive director of the Bitcoin Foundation, argued at one point, later stating: “The point is that current regulatory frameworks are sufficient to cover in specific use cases, rather than [the technology] having its own regulation.”
That said, Friday’s event highlighted the potential for some kind of common ground to be found – especially if such conversations continue between lawmakers and stakeholders working in the state.
Chino, commenting after the event, pointed to the need to “define the terms before [states] regulate” and called for community members to play a more active role in this process.”
“It’s happening at a state level in Tennessee and Nebraska and New York,” he told CoinDesk, concluding:
“Bitcoiners need to show up.”
Nikhilesh De contributed reporting.
Photo by Nikhilesh De for CoinDesk.