NYDFS Extends BitLicense Bitcoin Regulation Comment Period

The BitLicense saga continues: Today, Ben Lawsky took to Twitter to announce that the New York Department of Financial Services…

The BitLicense saga continues: Today, Ben Lawsky took to Twitter to announce that the New York Department of Financial Services (NYDFS) will be extending the official comment period for the proposed BitLicense regulatory framework. The original plan was to allow a 45-day comment period; around the world, this timeframe was criticized as being too short given the magnitude of the proposed regulations. Presumably, as a result of the community's interest, the NYDFS has chosen to extend the official comment period from 45-day period to a 90-day period. The news has been well-received by the Bitcoin subreddit, even though many in the community understand that the changes they want to see may not ever be implemented.

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The text of the announcement, which was posted on the NYDFS website, is shown below:

Note: There has been a significant amount of public interest in and commentary on DFS' proposed regulatory framework for virtual currency firms. A number of groups and individuals have also requested additional time to study the proposal given that it is the first of its kind and could potentially serve as a model for other jurisdictions. As such, DFS has doubled the length of the initial comment period for its proposed Virtual Currency regulatory framework to 90 days from 45 days. Comments will now be due October 21, 2014. (There would also be an additional comment period beyond that if DFS makes material changes to its initial proposal, which would provide further time for public feedback.)

The NYDFS acknowledges that their attempted BitLicense proposal is going to have far-reaching consequences outside of New York. While Lawsky doesn't seem inclined to consider the plight of legitimate Bitcoin businesses headquartered in states other than New York within America, and also internationally, that wish to serve New York's millions of internet-connected residents. The comment period extension is the latest indication from Lawsky that the NYDFS is willing to work with the thousands of commentators on his proposed regulation. Furthermore, the regulators have promised that if material changes are made, an additional comment period will be opened. The Bitcoin community is waiting to see what kind of material changes will happen with the proposed BitLicense regulatory framework. Some of the most galling propositions presented by the BitLicense are exemptions for established centralized banks and the requirement of profits to be invested in safe USD options.

BitLicense Received Comments from Around the World

Since the BitLicense's reveal last month, many organizations around the world have stood up in opposition of the regulations, in their current form. The most recent open letter addressed to the NYDFS comes from Bobby Lee, Lin Li, and Mingxing Xu, the three CEOs of three of China's biggest and most well-established Bitcoin exchanges. The Chinese Bitcoin exchanges, who more or less represent the sentiment of all Chinese Bitcoin services, believe

"(i) the BitLicense regime should cover only virtual currency businesses with meaningful New York connection

(ii) a licensee’s affiliates should only be required to disclose books and records to the NYDFS to the extent such records pertain to the licensee’s operations

(iii) the necessity of  performing enhanced due diligence on a customer should turn on whether the customer and the applicable licensee are from the same jurisdiction, and not on whether the customer is a U.S. person."

Previous calls-to-action regarding the BitLicense have been led by several organizations and individuals within the community. On one end of the spectrum, Bruce Fenton has denounced the proposed regulations as coming from a corrupt and non-democratically-elected source. Elsewhere on the spectrum, the Chamber of Digital Commerce has been asking the NYDFS for an extension that lasts until the end of the year: The current extension only runs until October 21st. Only time will tell whether this 45-day extension from the NYDFS is a nominal concession or an indication of "material change."

Last modified (UTC): August 21, 2014 8:24 PM

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Caleb Chen @bitxbitxbitcoin

Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.

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