Earlier today, NYDFS Ben Lawsky posted to Twitter stating that all the BitLicense comments received by the department have been published. All in all, the NYDFS received 3,746 comments from around the world. The vast majority of commentators are individuals are the average length of comments vary greatly. However, some notable large companies also submitted comments to the NYDFS to seek clarification or provide suggestions. Walmart, Amazon, and Western Union are three of the largest companies that have publicly commented on the BitLicense. Despite releasing the comments, Lawsky still has not released the research and studies that the NYDFS used to justify writing the BitLicense in the first place.
Walmart and Amazon Worry about Gift Cards
Walmart submitted its comments under Ostroff Associates, a New York based government relations firm. Walmart is worried that the proposed BitLicense regulation might end up effecting gift cards. In the comments, Walmart specifically states:
As I mentioned, Walmart is concerned that the proposed language, as written, could be construed to capture gift cards... So maybe a simple statement that “gift certificates as that term is defined in NY Abandoned Property Law §103 are not considered to be Virtual Currency” tacked on to the part where they call out “affinity or rewards” programs would be perfect.
Amazon also had questions for the NYDFS about centralized virtual currencies such as AmazonCoin. Amazon's comments were made directly by Amazon's Associate General Counsel:
We are specifically concerned, however, that the broad definition of "virtual currency" may inadvertently result in certain products being captured and that the exceptions to this definition are too narrow to carve out such products. For the reasons discussed below, Amazon respectfully requests that the DFS expressly clarify that the following products are excluded from the definition of "virtual currency" in its final rulemaking: (1) "closed-loop" digital payment methods; and (2) prepaid access, stored value cards, or prepaid cards denominated in fiat currency. Clarifying that these products are excluded from the virtual currency regulations will ensure that the consumers continue to have access to these popular payment methods , which do not pose the same money laundering or financial stability issues that cryptocurrencies and anonymous, tradeable virtual currencies pose to consumers and the financial system.
Western Union BitLicense Licensing Suggestions
Even more interesting are Western Union's BitLicense comments:
We are concerned, however, that the approach suggested in the Notice does not clearly address the interaction of VC (virtual currency) Licensees with New York money transmitted licensees (each, a "MT Licensee") or provide enough clarity regarding select requirements applicable to VC Licensees, including the AML requirements. Western Union respectfully requests that the DFS consider adopting the suggestions set forth herein, as we believe they will better effectuate the purposes of the Notice and provide needed clarity on certain matters:
1. The Final Rule Should Expressly Clarify that Engaging in Money Transmission Activity by a MT Licensee or Non-Financial Activity that Supports a VC Licensee is Not a Virtual Currency Business Activity.
2. The Final Rule Should Exempt From Licensing Requirements MT Licensees that are Approved by the Superintendent to Accept Virtual Currency as Payment for Money Transfers.
3. Proposed Part 200 Should Include Provisions Related to Conducting Virtual Currency Business Activity Through ATMs, Kiosks, or Similar Technologies.
That's right, Western Union wants to make sure that it doesn't need to apply for a BitLicense even if it is working with virtual currencies, or virtual currency companies. Western Union seems particularly interested in making sure that they themselves do not require a VC License (BitLicense). However, Western Union has a lot to say about who does need a VC License. Specifically, Western Union has suggested to the NYDFS that every virtual currency ATM or Kiosk, with the exception of WU kiosks, should require a license. Western Union also had more reasonable suggestions for AML requirements (such as eliminating a redundant SAR report) as well as additional suggestions (such as asking for assertion from the DFS that BitLicensee information will be remain confidential).
Western Union Wants Ben Lawsky to Approve Every Bitcoin ATM Location
In their comments, Western Union expanded on point 3 of their licensing suggestions:
Based on our experience, Western Union believes that virtual currency transactions conducted at Kiosks may pose unique risks which differ from person-to-person fiat currency transactions conducted using Kiosk-like devices, personal electronic devices or inperson transactions. For example, it may be difficult to determine the physical location or identity of a recipient to a virtual currency transaction. Also, virtual currency transactions may be at increased risk for illicit or fraudulent activities which can only be identified by observing unusual consumer behavior in person, such as whether individuals are using stolen information, loitering, or engaging in organized group planning, or whether there are individuals who appear to be using pressure techniques that happen outside of an actual transaction. For these reasons, it is our view that some level of oversight is warranted at this time for virtual currency transactions conducted through Kiosks. Accordingly, we believe the establishment and placement of Kiosks should be subject to the Superintendent's approval and oversight.
Western Union seems hellbent on suggesting "improvements" to the NYDFS BitLicense that would simultaneously drive out competition while leaving a Bitcoin option open for the global company. The new BitLicense proposal will be revealed by Lawsky soon, and is likely to include a Transitional BitLicense. Even if Ben Lawsky isn't the superintendent in charge once the BitLicense is enacted in its final form, the suggestion is still ridiculous.
What do you think about the BitLicense comments? Comment below!
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