Block chain API developer Chain has raised $9.5M in new funding to accelerate its growth. Overstock is now allowing its international customers to pay with bitcoin. Y-Combinator backed Shift Payments debuts at demo day. Andreas Antonopoulos has written a new “open-source” bitcoin book directed at new Bitcoin developers. And you all have just 20 days to get your comments in to Ben Lawsky and company regarding the BitLicense.
Over the past few weeks, I have highlighted eloquent public responses to the proposed BitLicense framework from Circle executives, the Mercatus Institute, and various individual bitcoin enthusiasts. Many other leading bitcoin companies will respond directly to the NYDFS with carefully crafted comments that highlight their specific concerns in the coming weeks. Of course, I have also contributed my own thoughts via this blog, and will continue to do so throughout the rest of the public comment period.
So it might be easy for you, the individual enthusiast, or you, the casual investor, or you, the student entrepreneur, to assume that your feelings and perspectives have been or will be properly covered by the myriad other responses.
In truth, it’s a fair assumption that the only comments which actually rise to the top of the NYDFS pile for real consideration will be those sent by larger advocacy groups, funded virtual currency startups, institutional investors, and the law firms representing those groups.
But that doesn’t mean that smart, polished individual contributions are wastes of time. On the contrary, when it comes to many important subjects, such as advocacy for a safe harbor provision for startups and arguments in favor of limited regulation of open-source software, these perspectives will be invaluable.
Whether they are read in their entirety initially means very little actually. However, whether you realize it or not, we’re already prepping for part two of what will be a lengthy turf war: the BitLicense courtroom battles.The BitLicense lawsuits, “discovery” & “arbitrary and capricious” standards
A quick conversation with any of bitcoin’s top legal experts or executives will give you a clear indication that many of the BitLicense’s proposals are almost guaranteed to be fought in court. As a regulator, you simply don’t pare back your initial guidelines drastically, regardless of the public outcry. Maybe the NYDFS clarifies its loosest language and strips its most outlandish requirements, but the core proposals will still be an onerous and crippling overreach of power. And they will have to be challenged aggressively.
There’s an element of face-saving in play. Politicians and their regulatory cousins simply don’t admit fault very easily. This is especially true given the time, energy and resources that this particular department has thrown at crafting these initial proposals. Lawsky and his colleagues seem likely to default to strict rules and overreach because it is easier to be tough on crime than permissive of disruptive innovation - in terms of both talking points and future political (and financial) backing on Wall Street.
Thus, we need to start digging in for a prolonged battle when it comes to many of the provisions that matter most to bitcoin’s future viability.
The Bitcoin community needs to submit droves of comments that can later be referenced in lawsuits against the department related to its “arbitrary and capricious” prescriptions. Every well-spoken entrepreneur or $1,000 bitcoin investor should send comments which bash requirements that overreach relative to existing federal regulations of MSBs, or that restrict unsanctioned releases of open-source software of any kind, or that include non-financial applications under its broad scope.
Your comments really only need three things.
The first is context. Who are you? Why should your comments be taken seriously (assume by a judge, not the department)? And how will the BitLicense harm you? On the last point, it is key to focus on how the proposals will unfairly and potentially illegally harm you. You need not cover everything wrong with the BitLicense (others will do that for you), but specificity is key.
The second, then, is specificity. Be direct and specific about which elements of the BitLicense are flawed in their language, scope or essence. Use specific examples and highlight precedents from other technological turf wars (the internet, VoIP, etc.), and keep it concise and powerful.
Finally, the third is recommendations. It isn’t enough to crap on the BitLicense’s very existence. (Regulators gonna regulate.) What you need to do is highlight specific language in the proposals and suggest actual improvements or outright redactions. If you haven’t yet read Jerry Brito’s public comments
out of the Mercatus Center, it might inform your own approach.
Any public comment which is smart, devoid of rhetoric, and includes these three elements will be valuable in “discovery”, the legal procedures used to gather evidence for any future lawsuits. A future plaintiff representing the interests of bitcoin should have dozens of readily available resources which hammer the department for ignoring the reasonable pushback of the broader community on the most outlandish components of the BitLicense. (These documents are easily obtained through a Freedom of Information Act, or FOIA, request.) How then should you actually submit public comments?
As a community, we have just 20 more days to submit comments to the NYDFS related to the BitLicense. All of this “testimony” should be electronic and submitted to Mr. Dana Syracuse via email at email@example.com. It appears that we have until close of business on Monday, September 8 to submit comments, but Perkins Coie recommends getting all final comments in prior to midnight on Friday, September 5 just to be safe.
The firm has also provided a helpful template for those of you not used to writing business emails to bureaucrats:
[Your letterhead including your address and contact info]
Mr. Benjamin M. Lawsky
Superintendent of Financial Services
New York Department of Financial Services
One State Street, New York, NY 10004-1511
Mr. Dana V. Syracuse
Office of General Counsel
New York State Department of Financial Services
One State Street, New York, NY 10004
Tel: (212) 709-1663
Re: Regulation of the Conduct of Virtual Currency Businesses – Addition of Part 200 to Title 23 NYCRR
Dear Mr. Lawsky and Mr. Syracuse:
[Add your comments here]
[Your Company Name]
You should sign and scan and email the letter to firstname.lastname@example.org.
The text of your cover email could be simply: Please see attached comment letter on the proposed BitLicense rules.
Hope this all helps.
As if you need more evidence that big or small, you should be investing time in combatting these regulations, bitcoin expert and CPA, Jason Tyra recently estimated that the cost to even apply for a BitLicense will be $12,000 to $15,000. That’s just for New York State and solely for the application; it includes absolutely no ongoing costs related to compliance or bonding. Take a read:http://www.bitcointaxblog.com/bitlicense-numbers/
Yesterday, I wrote about block chain API provider, Chain. Today they announced a $9.5mm funding round
led by Khosla Ventures. ”PayPal Mafia” member and Stellar Foundation board director Keith Rabois will join the company’s board of directors. High profile investors Kevin Ryan, Scott Banister, Homebrew, and 500 Startups joined the round along with returning investors RRE Ventures, Thrive Capital and SV Angel. As usual, bitcoin regulars Barry Silbert (via the Bitcoin Opportunity Corp) and Pantera Capital were also part of the syndicate. This will be an exciting company to watch. Congrats to the deal team.
Overstock to Allow International Customers to Pay in Bitcoinhttp://nyti.ms/1uVt5hc
Since the beginning of the year, Overstock has been accepting Bitcoin for domestic sales, but now it plans to allow international customers to also pay in Bitcoin. This would make Overstock the biggest merchant to extend its bitcoin payment option beyond the US. Patrick Byrne, Overstock CEO and bitcoin enthusiast, introduced a new payments system to its international system, O.co, which will allow for international customers to pay in the digital currency. Bitcoin sales account for about 0.25% of Overstock’s total sales. Australian Bitcoin Industry Reacts to Tax Proposalshttp://www.coindesk.com/australian-bitcoin-industry-unhappy-tax-office-issues-guidelines/
Today, the Australian Tax Office (ATO) released it guidelines on how bitcoin businesses and individual users will be taxed. Bitcoins will be legally regarded to as “money,” but will be taxed in a similar way to other non-cash transactions. This regulation is set to affect Australian bitcoin businesses that have been treating bitcoin equal to the Australian dollar. Responses to the proposals were mixed; the Bitcoin Association of Australia was “disappointed,” others were happy with the ATO’s level of consolation with bitcoin experts within the community, while the CEO of Bit Trade Australia viewed the guidelines as “impractical.” Bitcoin Exchanger Must Fave Charges Related to Silk Roadhttp://www.bloomberg.com/news/2014-08-19/bitcoin-exchanger-must-face-charges-related-to-silk-road.html
Robert Faiella, alleged co-conspirator (along with Charlie Shrem) of laundering more than $1 million in bitcoin, was denied a request to throw out one of the counts against him. Faiella attempted to claim Bitcoins aren’t money, thus he should not be convicted of operating an unlicensed money-transmitting business. His claim was rejected. Charlie Shrem and Faiella both stand accused of using Silk Road, a former online illegal drug marketplace, to launder bitcoin. Shrem and Faiella have both pleaded not guilty for their trail scheduled on September 22nd. LibraTax IRS-Compliant Bitcoin Accounting Software Nears Launchhttp://www.coindesk.com/libratax-bitcoin-accounting-software-nears-launch/
Libra, California-based software developer, has announced the imminent release of LibraTax. LibraTax is a new software that will allow individuals and small businesses to comply with the latest IRS regulations and file returns reporting bitcoin and other crytocurrencies. LibraTax will collect the user’s necessary data from the block chain, synchronize it with bitcoin’s fair market value, and then automate the accounting process. The software should become available by the end of the month. Shift Payments Premiers at Y Combinator’s Demo Dayhttp://blogs.wsj.com/moneybeat/2014/08/19/bitbeat-shift-hits-accelerator-bitcoin-recovers-from-flash-crash/
Yesterday, Shift Payments, a bitcoin startup that produces a debit card linked to all of the user’s bank accounts and bitcoin wallets, easily allowing for those funds to be spent anywhere, pitched its company at Silicon Valley’s Y Combinator Demo Day. Through a partnership with a Japanese bank, Shift is able to leverage the Visa network, upon which Shift’s debit card works. Currently, Shift is running a beta with 100 cards. New Sentiment Index Tracks Public Opinion on Bitcoinhttp://www.coindesk.com/new-sentiment-index-tracks-public-opinion-bitcoin/
CoinDesk has launched a new service that aims to provide a snapshot of the general attitude towards bitcoin at any given time, named the Bitcoin Sentiment index (BSI). The BSI will use data collected by Qriously, a mobile ad infrastructure that delivers questions to millions of people, to gather information. Qriously will ask the public one simple question: “The importance of bitcoin in 12 months will: (Increase/Decrease/Stay the Same).” Those answers will compute a “sentiment” score, which will drive the index. Gubernatorial Candidate Andrew Hemingway Hopes Bitcoin Could Play Part in NH Economyhttp://newsbtc.com/2014/08/19/gubernatorial-candidate-andrew-hemingway-hopes-bitcoin-play-part-nh-economy/
Republican gubernational candidate for the state of New Hampshire, Andrew Hemingway is a firm bitcoin believer. Opposing the NYDFS’ BitLicense, Hemingway believes that New Hampshire could instead become the world financial capital for Bitcoin, over New York. Hemingway also believes that bitcoin should not be regulated, but instead be treated as a means of payment for taxes and fees. Hemingway will be accepting political campaign donations in bitcoin.