The Chamber of Digital Commerce (CDC) has submitted its official comments to the New York Department of Financial Services (NYDFS) regarding the BitLicense proposal.
Launched in July, the Washington-based lobbying group led by president and former Forbes contributor Perianne Boring is seeking to influence broader bitcoin policy in the US, while advocating for smart regulation that will support the digital currency industry.
The CDC offered a broad critique of the proposal, suggesting that the NYDFS needs to revise its definition of 'virtual currency' and 'virtual currency business activities' to avoid what it called an "egregious act of regulatory overreach".
The full 10-page filing goes on to suggest that the NYDFS should include a safe haven provision for startups, exempt small businesses from regulation, make better use of existing regulation and extend its current 45-day comment period so that the industry would have more time to fully respond to the proposal.
Further, the CDC offered its services to the NYDFS, suggesting that it could provide the department's members with the necessary information to revise the proposal, and expressed its hope that its comments could provide a similar service to the community.
“We have been very vocal in encouraging the industry to submit comments to the NYDFS. The Digital Chamber’s comments are posted on our website and the industry is welcome to use them as a resource."
The news follows a similar 6th August filing submitted by the Bitcoin Foundation, and comes amid a period of increasing scrutiny for the proposed laws. In recent days, Circle CEO Jeremy Allaire and the Mercatus Center's Eli Douardo and Jerry Brito have criticized the regulations.
Small business exemption
Perhaps most notably, the CDC advocated for small businesses, defined under New York law as those that employ 100 people or less, to be excluded from the law. Businesses that hold under a certain amount of assets, Boring said, should also be exempt from compliance.
"Startups are hotbeds for innovation; they often keep larger players on their toes by offering superior products at lower prices. The regulator of a market should avoid building any artificial barrier to entry. Artificial barriers to entry so will deter intelligent minds from developing interest in the market, make existing players complacent and hurt consumers."
The filing further states that the NYDFS is required to accommodate small businesses when writing its proposed rules, saying that this is mandated by Section 202-B of the New York Administrative Procedures Law.
Freedom to invest and innovate
The CDC also took aim at Section 200.8(b), which relates that bitcoin businesses maintain their profits and earnings in permissible investments denominated in US dollars, arguing businesses should be able to invest profits without restrictions provided they maintain full reserves.
Under the proposal, permissible investments include certificates of deposit, money market funds, state or municipal bonds and US government securities.
Section 200.10, the provision that requires bitcoin businesses to receive written approval from the NYDFS for any new product, service or activity, was also cited for revision.
Arguing that the provision be struck from the proposal, Boring said:
"It is dubious that NYDFS has, or can be expected to develop, the technical and business sophistication to make quick and astute decisions as to product development."
She added: "Having a regulator calling the shots in the marketplace, rather than protecting consumers, would cripple any industry and would take NYDFS far outside its competence and appropriate role as regulator."
Images via Chamber of Digital Commerce / Shutterstock