As described in a blog post released today, the Bitcoin Foundation has submitted a second public comment to the NYDFS’s proposed BitLicense public comment period. The NYDFS has refused to reveal the “needs and benefits” justifications, which are legally required, for the BitLicense’s severity. In this comment, Bitcoin Foundation General Policy Counsel Jim Harper emphasized that:
The sacrifice of some decentralization in furtherance of other benefits to the Bitcoin ecosystem must meet a high burden of proof. Nobody should want a regulation that sacrifices Bitcoin’s benefits if doing so produces unknown or merely speculative benefits for New York consumers of the New York financial services marketplace.
Also read: NYDFS Extends BitLicense Comment Period
BitLicense Lack of Transparency
The Bitcoin Foundation first asked the NYDFS in August for “copies of any risk management and cost-benefit analysis (or other systematic assessment) that is part of the ‘extensive research and analysis’ referred to in the statement of needs and benefits for the proposed regulation.” The NYDFS, at first, promised to release the relevant research and analysis that allegedly showed the need for the severity present in the BitLicense. However, in September, the NYDFS flip flopped and informed the Bitcoin Foundation that said documents would not be released until December, well after the end of the public comment period.
In New York, proposed laws need to have established and clear “needs and benefits,” something that the NYDFS has not proven to the community. In fact, some of the BitLicense’s proposed actions would run afoul of the Fourth Amendment. Other government agencies around the world, such as the EBA and even the St. Louis Federal Bank, have done research on Bitcoin and not called for BitLicense-style regulation in their respective spheres of influence. Harper ended his blog post with a simple warning and suggestion to the NYDFS:
A regulatory regime that is markedly out of step with others is very likely to create inefficiency in national and global markets, which would suppress competition, hamper the delivery of benefits to consumers and frustrate consumers,” concludes Harper. “New York is a very special state, but we recommend that it join the national and global community of regulatory bodies that are taking a methodical, iterative approach to Bitcoin business regulation.
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