And then there’s Circle. The company’s instant bitcoin-buying system is nearing its public launch, and it very much has an eye on being a huge mainstream success. Given that it will work largely with credit cards and other data, Circle will already need to be compliant with most existing know-your-customer and anti-money laundering rules. Yet, in a blog post published today by CEO Jeremy Allaire, the company has come down hard against the NYDFS BitLicense proposal.
The high-level goal of establishing a license framework for a new class of digital currency-based money transmitters and money services businesses is reasonable. Having such a framework in place can materially open up commercial opportunities for companies by reducing the perceived risk and the regulatory uncertainty that currently hang over Bitcoin companies—enabling firms to find banking partners, insurance partners, auditors, and other business partners. … However, as it stands, the BitLicense is likely to have the opposite impact—radically limiting those who can participate in this industry, pushing firms offshore and into sometimes shadier jurisdictions. Furthermore, as currently written, it would be technically impossible to comply with the BitLicense proposal. Without some material changes, Circle will have no choice but to block New York customers from accessing our services.
Allaire says that he is “cautiously optimistic” many of the proposed revisions to the BitLicense will be included in the final version, and that he believes the NYDFS leadership will extend the comment period and craft a less restrictive set of rules. The post also includes a number of broad points, many already formally submitted to the NYDFS, to address industry concerns. Noting that digital currency is at a “pivotal moment,” Allaire suggests that the BitLicense must provide a template for “other state, federal or international rule-making.” If handled badly, he says, “it would be devastating for the industry.”