Barry Silbert, CEO of SecondMarket, has posted an official letter requesting that the NYDFS extend the deadline for filing public comment by 45 days, on their “BitLicense” proposal. He urges affected companies and individuals to sign. Currently, the list of signatures includes many A-Listers such as Elizabeth Ploshay, a board member of the Bitcoin Foundation, Erik Voorhees, several prestigious universities such as Harvard and Stanford, and of course Barry Silbert himself. The more signatures the letter receives, the greater the chances we have to help shape or oppose the NYDFS BitLicense regulations.
What could happen if the NYDFS BitLicense is put into effect as is?
This article is not meant to be a FUD (Fear, Uncertainty, and Doubt) article for Bitcoin, so please do not take it this way. There is still time to combat the effects of this proposed regulation from the NYDFS, but an extension will help to allow the community to come up with better solutions to the problem. Below are just a few things that could happen with this new regulation that mandates that all New York residents and companies doing business involving New York must obtain a license to conduct these acts.
When involving New York, you may not do the following without a BitLitcense:
- Mine cryptocurrency of any kind
- Trade on unlicensed exchanges
- Run a business involving cryptocurrencies
- Transact with cryptocurrency in any way
This part is scary – What personal information do they collect?
The NYDFS BitLicense would mean that New York has complete and utter control over who may use cryptocurrencies while involving New York. Your business will need to register for a license, and they will know the following about you. You may not transact with new age money in New York without this license.
- Your full name
- Your DBA name (If any)
- The form of your organization (e.g. LLC, Corporation, Sole Proprietorship, etc.)
- The date your business was founded
- The jurisdiction where you founded your business
- A list of your business affiliations and a map showing the relationships between them
- Each Director, Principal Officer, Principal Stockholder, and Principal Beneficiary of the applicant’s, life story as the NYDFS Superintendent finds appropriate. Biographical data includes, but is not limited to, name, physical and mailing addresses, and information and documentation regarding their personal history, experience, and qualification. Oh, and don’t forget you’ll need to include a release form to give that data to the department as well. Think I’m joking? Look at section 200.4 entitled “Application.” Most this bullet point was copy and paste.
- Further, into your private life, provide “a background report prepared by an independent investigatory agency acceptable to the superintendent for each applicant, and each Principal Officer, Principal Stockholder, and Principal Beneficiary of the applicant, as applicable” (Copy and paste, my friend!)
- Now for even more scary and tedious stuff where they treat you as a potential felon. For each applicant, and each Principal Officer, Principal Stockholder, and Principal Beneficiary of the applicant, as applicable, and for all individuals to be employed by the applicant, they require a set of completed fingerprints. You may also present a receipt from a vendor that’s acceptable to the Superintendant, which states the date when the fingerprints were taken for the State Department of Criminal Justice and the FBI. You’ll need to pay any fees the Superintendant wishes, plus submit two portrait-style photos of each person.
- Back to the fairly mundane, you’ll need to provide a chart of your management structure detailing its hierarchy and each position’s duties.
- A current financial statement for the applicant and each Principal Officer, Principal Stockholder, and Principal Beneficiary of the applicant, as applicable, and a projected pro forma balance sheet and income and expense statement for the next year of the applicant’s operation
- Provide a description of the proposed, current, and historic business of the applicant, including detail on the products and services provided and to be provided. Include all associated website addresses, the jurisdictions in which the applicant is engaged in business, the principal place of business, the primary market of operation, the projected customer base, any specific marketing targets, and the physical address of any operation in New York
- Details of all banking arrangements
- All written policies and procedures
- An affidavit describing any administrative, civil, or criminal action, litigation, or proceeding before any governmental agency, court, or arbitration tribunal and any existing, pending, or threatened action, litigation, or proceeding against the applicant or any of its directors, Principal Officers, Principal Stockholders, and Principal Beneficiaries, as applicable, including the names of the parties, the nature of the proceeding, and the current status of the proceeding
- A copy of any insurance policies maintained for the benefit of the applicant, its directors or officers, or its customers
- An explanation of the methodologies used to calculate the value of Virtual Currency in Fiat Currency
- If the Superintendant wishes to retrieve any more information than just your life story, he can do that.
- You must certify that you’ll be compliant under the NYDFS BitLicense laws
- You’ll need to pay an undisclosed fee to receive your license.
Bruce Fenton says just to ignore this – I say stand up to them!
Bruce Fenton of Atlantic Financial Inc. says just to ignore the new NYDSF BitLicense regulation. You know, because laws never get enforced and letting politicians make the rules is always the best way to go. Don’t oppose anything now, just let this slip by you. What’s his reasoning behind this? “The regulators are not our friends,” he said. “I don’t believe we should reach out to them. I don’t believe we should engage them.” So let us all stick our heads in the sand and be good little ostriches. If you’re not the “sit around while being taken advantage of” type, and you have a financial interest in opposing this NYDFS BitLicense, you may consider signing the request for a 45 day extension so the community can work on a solution to this mess. If you think this only effects New York residents, think again!
Featured image by Shutterstock.