Cryptocurrency, decoding the virtual form of currency for New Yorkers – New York State legislature hearing 23 February 2018

Cryptocurrency, decoding the virtual form of currency for New Yorkers – New York State legislature hearing 23 February 2018

Friday, February 23, 2018

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The Foundation’s Executive Director, Llew Claasen, represented the Foundation at a New York state legislature hearing into cryptocurrencies and BitLicense on February 23, 2018. It’s encouraging to see that the New York Senate is exploring these issues and inviting representative organizations like ourselves to participate.  

We agree that a legislative assessment of the impact of cryptocurrency activity in New York State is needed from a number of different perspectives, including various industry players, developers, current users of the technology, consumers, as well as regulators. However, our primary concern in New York focuses on a regulatory approach which is fundamentally flawed, has chased the industry away from New York, and puts the state at a significant disadvantage for the future.

At the outset, a regulator is not entitled to choke off an industry on a whim, is certainly not entitled to act beyond its statutory authority, and is certainly not entitled to use a burgeoning technology as “guinea pigs” to regulate future financial activities, which is exactly what Ben Lawsky did when he promulgated the BitLicense. This is why the Foundation believes that the BitLicense approach is fundamentally flawed and should be legislatively reversed.

The Foundation trusts the legislature will formulate an appropriate approach to balance the need to support this new technology and the associated blockchain framework with the need to properly defend consumers and market participants. However, a heavy-handed approach to regulation will only result, not only in chasing the industry away from New York, but if such a trend continues, away from the United States to overseas jurisdictions that provide a more favorable environment. This will hinder this burgeoning technology from evolving and providing a significant benefit to financial institutions and consumers alike.