BitLicense New York Exodus. Apparently it's not just exchanges leaving New York. Coinbase reported almost $100,000 to apply for BitLicense, that is just for New York, imagine if each state takes on the same requirements.
Behind the "exodus" of bitcoin startups from New YorkThe exits were a strong reaction to the application requirements for a BitLicense.
Last weekend the deadline to apply for a BitLicense came and went, and a slew of bitcoin startups went too—right out of New York State.
The BitLicense is New York’s regulatory badge of approval, required of all digital-currency businesses that are deemed “money transmitters” (companies that hold customer funds, most of them exchanges). And it has been highly controversial in bitcoin circles since it was first unveiled over year ago, after multiple revisions.
Bitcoin executives—even those who chose to apply for a license for their company—have gripes about the final set of rules, and are still hoping to see it change. This weekend, many of them decided to make a statement: rather than apply for the license, they left New York. For some with physical headquarters in the state, that meant literal moving trucks. For others it meant cutting off service to New York-based customers.
To leave New York entirely may seem like a drastic step, but much of the most fevered activity around trading of the digital currency is happening outside the U.S. anyway. The new defectors are all following ShapeShift, a startup led by outspoken bitcoin entrepreneur Erik Voorhees, which was the first to go, cutting off service to New York just days after the BitLicense came out.
Why are they upset?
Critics of the BitLicense see limitations in the specific rules, such as the requirement of new licenses for every new service offered. But the application process, too, has left some companies wringing their hands.
The application costs $5,000, which alone does not necessarily seem excessive. But executives say that the paperwork was extensive and required legal help, which carries additional fees. Jaron Lukasiewicz, CEO of Coinsetter, tells Fortune his company spent nearly $50,000 to apply for the BitLicense. George Frost, chief legal officer at Bitstamp, told Coinbase it was more like $100,000 for his company. If either of those figures is remotely accurate, that cost would certainly be prohibitive for smaller companies.“You’d hope that the costs are outweighed by the value, but for some, maybe not,” says Lukasiewicz. He says that Coinsetter seriously considered not applying, but, “I definitely don’t need the legal risk.” Lukasiewicz is not a fan of the BitLicense, or of regulation in general for the space, but he says, “I don’t want to have to hide in New York. And I viewed it as something that could have marketing upside in terms of helping people feel safer using us.”
Those who leave and those who stay
This is not a comprehensive list, but here are some of the companies that packed up and left New York: Bitfinex, BitQuick, BTCGuild, Eobot, Genesis Mining, GoCoin, Kraken, LocalBitcoins, Paxful, and Poloniex. Xapo left New York back in May.
Almost all of them published statements about their reasons for refusing to apply, and most of them read similarly. “This particular piece of legislation is unnecessary and is an obstacle to free market innovation,” wrote Genesis Mining on its blog. Kraken, an exchange headquartered in San Francisco, said that the license, “comes at a price that exceeds the market opportunity of servicing New York residents. Therefore, we have no option but to withdraw our service from the state.”
Even some digital currency companies that are not money-transmitters, and thus do not need to obtain a BitLicense, voiced their criticism of the regulations and support for companies that exited. Paul Puey, CEO of Airbitz, wrote, “Luckily at Airbitz, we aren’t affected… With all the companies announcing these restrictions today, it should remind the community of the importance to be, and to support, decentralization. Bitcoin was intended to give people true control and access to their money and every time we use a centralized service, we aren’t truly using Bitcoin.”
[...]
http://fortune.com/2015/08/14/bitcoin-startups-leave-new-york-bitlicense/