Throughout history, legislation and regulations pertaining thereto have been passed amid significant dissent. The Bitlicense proposal, from start to finish, might serve as a thorough example, leaving out none of the telltale characteristics:
- a) insular and limited information gathering techniques
- b) lack of definitive necessity
- c) unintended consequences (below)
Friday, professional trader-friendly Bitcoin exchange Bitfinex announced to clients residing in New York that all remaining deposits would be liquidated to cash at then-market rates on Friday. Fundamentally, Bitfinex expressed dissent concerning the Bitlicense’s passage and the new requirements made as a result. Its inevitable conclusion was that its business model was no longer compatible with the State of New York’s financial hall monitors.
Due to financial regulation changes in the State of New York, certain Bitfinex services are no longer available for New York Residents. […] Bitfinex is not applying for a BitLicense at this time. Accordingly, Bitfinex is modifying account privileges for New York Residents, effective August 10th, 2015.
Sunday, San Francisco-based exchange Kraken, who brought on compliance veteran Howard Bernstein in May, announced that it, too, would no longer be offering its services to New York-based clients. Kraken illuminated the issue with a list of clear reasons for declining to apply for a Bitlicense, as well as the following creative epithet.
Also read: Bitcoin Exchange BitFinex’ Hot Wallet Hacked
While we’re sure that the protection from New York law enforcement is valuable, it comes at a price that exceeds the market opportunity of servicing New York residents. Therefore, we have no option but to withdraw our service from the state.
The first authorized “Bitcoin bank,” itBit, was granted a “trust company charter” from the State of New York in May.
Images from Shutterstock and Kraken.