Last weekend, Perianne Boring spoke at the North American Bitcoin Conference in Chicago with the announcement of the Chamber of Digital Commerce, Bitcoin’s first office for political affairs. On Thursday, July 31st, she will be in NYC at the Bitcoin Center to talk about the political stage that is set for Bitcoin in the coming months.
This will be a landmark event given the regulatory context. Last Thursday, July 17, the New York State’s Department of Financial Services released a draft of proposed Bitcoin regulation utilizing a system of BitLicensing. The draft entered a period of public feedback on Wednesday and will continue for 45 days. The Chamber of Digital Commerce and many others in the cryptocommunity have shared concerns that the comment period may be too short as the draft is potent, long and difficult to understand. In a letter to the New York Department of Financial Services, prominent members of the Bitcoin community asked for an extension as well as the Chamber of Digital Commerce.
The big impact that is very possible here is that the idea of BitLicensing and the way it is implemented especially within the New York State draft would push the Bitcoin economy into a bank-centric system. Not unlike other forms of state licensing, this too will subject the industry to government scrutinizing, oversight, and cronyism.
It’s not hard to imagine how this may play out: Once licensing is implemented, the State of New York will have the legal ability to acquire as much information on Bitcoin accounts and users as they want. Should a company not comply or not meet a deadline, the DFS will, and out of reputation, they will strike down hard on the first non-complying companies in order to make an example. If the 45-day comment period proves to be too short and the legislation too complex and long, the crypto-community will be in danger, at least in the New York State.
Beyond that, the regulation itself poses a threat to start-ups and small businesses that don’t have the resources available to deal with the legal hoops and requirements. This will also further keep other businesses and industries from even considering cryptocurrency integration, thus hampering future success and innovation. The ones that will survive are the big, the banks and the already established.
And as the IRS ‘scandal’ continues to play out, we may have to ask the integrity of regulating bodies as they increase their potency in the industry. Beyond government organizations, what about the legislative bodies themselves? Should we put financial standards in the hands of appointed individuals like the Department of Financial Services, or elected peoples who may or may not have cryptocurrencies in the forefront of their issues? How much will the DFS allow to be put into the hands of the market?
If and when the state of New York’s BitLicensing goes into effect, it may set a precedent for other states to follow suit. The legal grey area will close when they decide on following in the intrusive regulation methods of New York or the more hands-off approach of Texas. It may become a major political battle and perhaps an issue in local and state elections within the next decade. In that, the Chamber of Digital Commerce may be a last defense in political measures and lobbying.
Of course, I’m dealing in many hypotheticals, but beware the hard hand of the government. The government bailed-out banks. The government pushed down false interest rates. The government assured risky CDOs and subsidized the housing market losses until it was unsustainable. As Bitcoin crosses the line into politics, we must consider the dangers at hand.
[divider]Bitcoin Center NYC[/divider]
Following her presentation, the Bitcoin Center will continue the night with their Thursday night Satoshi Square Trading, with live trading on the floor and free drinks.
Perianne Boring is the President of the Chamber of Digital Commerce and the authot of the ‘Boring Bitcoin Report.’ She also worked on Capitol Hill as a legislative analyst and advised on finance, economics, tax policy and healthcare.
The Chamber of Digital Commerce is not associated with the Bitcoin Foundation.