Topic: New York’s New Bitcoin Rules Are Going to Kill Its Startups (Read 3154 times)

I am lucky to be not in NY, and I hope it will not spread to other states soon

Well, you're in luck. As it so happens, banks are specifically exempt from these proposed regulations.









You might ask yourself 'why?'

If I wanted to trust a centralized institution then I'd be using a regular bank.  If you do not hold your own coins and you lose them then it's your own fault.  It's unfortunate that so many people whom do not understand cryptos go crying to BBB and local government to clean things up.  You want bitcoin to be modeled after the traditional institutions?  Perhaps you don't understand why this technology is so groundbreaking.   

There are a lot of businesses that are started in CA, mainly tech companies. Most tech companies that were created in the late 90's were based in CA.

The regulations that NY is proposing is good for bitcoin in general as it will give consumers certainty that an exchange is not going to fail the day after they deposit bitcoin with them.

Way to inject some realism into this. We sometimes forget, but the virtual world is aught but a gateway from and to the real world.

New York and California are not doing anything to Bitcoin that they don't do to every business. They are major economic players and they regulate all commerce to death. People don't start a business there because they want a regulation free environment they go to New Mexico for that. Hell, in New Mexico you can all but rape your employees, pay them minimum wage, provide no benefits, fire them at will for no reason, buy business zoned land for pennies on the dollar, pay no property tax, no business tax, pollute the environment without repercussions all because the government is backwards and corrupt.

The bad news is there is almost no economy in backwards little corrupt states. You won't make a fraction of the money there that you will in California or New York because there are few people living there and they don't have any money to spend. Bitcoin businesses will comply with all the stupid regulations and open in New York and in California because that's where the money is and always will be.

Bitcoiners get all excited when big players like the Winklevoss, Dish, Dell, Overstock and the like endorse Bitcoin. These are real businessmen and they will play by the book. They will be successful because towers of regulation are not new to them. Small players will not easily enter the Bitcoin market any more than they can enter any other market. Welcome to the first steps of wide spread adoption.

The rules are meant to make it so, over the long term it will be easier to deal in bitcoin as consumers will have confidence in the financial strength of the exchanges.

I'm not saying anything about the concrete rules that have been published regarding bitcoin. I'm just saying that a government may opt to put rules in place to protect their companies and citizens. Maybe the NY government believes those rules need to be put in place in order to avoid bankruptcies, scams, or whatnot.

Do you believe these rules were made to benefit companies and citizens? How so?

Well, a state, city our country can only try to put rules in place they think will benefit their companies and citizens the most. If they devise rules they think are suitable for companies dealing with bitcoin, they can just do that. It's their task to provide a legal framework for companies operating in their state, after all. If you don't want to do business there, just don't do it then, I guess

I guess the main offense is, who is New York to regulate Bitcoin? They didn't make it. They don't own it. It's not theirs. It belongs to the world, not to any one state or country or government. Is the rest of the world going to follow New York? Highly unlikely. So who cares if New York tries to slap regulations on Bitcoin? Bitcoin is much bigger than New York. By trying to regulate it, they are simply limiting themselves. People will use it freely in every other place, and New York will be excluded.

I think the theory that the whole proposal just being a 'foot in the door' is interesting. They post those restrictive rules only to publish the
'real' rules afterwards and everybody will be happy that they've been relaxed! Talking about human psychology!

I'm not quite sure of the accuracy of my info but back in the 70's I think Citibank or some bank with Citi in their name moved out of New York into the state of Dakota...can't remember if its North or South. The reason being was that NY had too much regulations that affected one of their service offering...That was VISA credit card service I believe. I see the same parallels with bitcoin. Back in the 50's no one wanted anything to do with a piece of plastic called a credit card, merchants wanted cold hard cash.

Note: I can't remember the details clearly but if you look it up there is info out there.

In that case, it would be far more reassuring if the drafter sounded like he wandered in from the Securities and Exchange Commission rather than from the U.S. Department of Justice.

Speaking of securities regulation: as part of my slew of responsibilities as part of the dev team for the Nxt clone NFD, I bought a complete, ~3,500 page paper copy of the complete securities regulations of my home domicile of Ontario, Canada. Carswell Publishers (Thomson-Reuters) was good enough to later send me an updated copy of the same book as part of my "subscription." Real masochists lug paper. 

What was worrying me was how Nxt's (and NFD's) "Asset Exchange" would look to an Ontario Securities Commission enforcement officer if he or she found out about it.

I was disappointed, but not really surprised, to see that the Ontario legislation's definition of "security" was so broad that a clever accountant could argue that good ol' "Canadian Tire Money" is a security. Inventory, or goods available for sale, is (of course) a current asset.

Now, Canadian law has a buzzword - "reasonable" - that Canadians in the law take seriously. If some intrepid accountant lodged a complaint about Canadian Tire money being an out-of-bounds security, an OSC enforcement officer would congratulate him for being clever but would end with: "of course, you're being unreasonable." And then, the officer would joke about it in private with his or her colleagues.

But something like the "feeshare" - a grey-area legal gimcrack something like a permanent prepaid lease on a house, only it's supposed to be a grey-area not-quite-a-common-share - would get an enforcement officer's serious attention. And not in a good way.

That's not a worry in the NFD nano-world, at the moment, but it's a big worry for the Nxters. The listings of the Nxt Asset Exchange are chock-full of feeshares. I know for a fact that one of the issuers is domiciled in Ontario, Canada. The name escapes me - damn my rickety memory. 

What does this have to do with Bitcoin? Simple. If the Bitcoin world comes up with a Bitcoin-centered suite of Crypto 2.0 solutions, like an Asset Exchange, the legal fate of Nxt's is going to be very relevant to Bitcoin. In this sense, Nxt and its offshoots are a kind of advanced expeditionary force for Bitcoin. If the Nxt AE gets slaughtered in court, Bitcoiners will know that an Asset Exchange is a no-go. On the other hand, if Nxt's AE survives and you come across Nxters doing a victory-parade kind of happy dance, you know that some kind of Asset Exchange is more-or-less legally safe for Bitcoin itself.

In this sense, Nxt and its offshoots are "good" altcoins in the old-school sense. They're serving as pilot plants for the Bitcoin world and the crypto world in general.         

The NY regulations are still in the draft phase and the regulator is soliciting comments from the public.

IMO these regulations are good for bitcoin over the long term as they only apply to exchanges and payment processors, and in simple terms only make exchanges hold sufficient bitcoin in reserve to cover all of their customer's deposits. The regulations also subject exchanges to audits to make sure they are complying with the above requirement. I would argue that the regulation would make it less likely that we would encounter another GOX type situation. 

Just to let you know, it can get much worse if the United States of Leviathan get a'juggernauting our way. Once of my secret fears revolves around the mighty U.S. Congress getting the idea in its head that using an 'umble anonymizer service should be considered obstruction of justice (a felony.)

God damn. I actually feel lucky that I'm Canadian, in a completely "American-minded" way!

Fly away my little start-ups! Fly to other states and countries!

Ouch, I was really looking forward to these regulations coming out, but this sounds a bit ominous. None of this is already set in stone, is it? I hear mention of CA... have any drafts come out from there?

or (for people involved more directly with computing science ) is like

compiler construction

http://en.wikipedia.org/wiki/History_of_compiler_construction