Farewell New York
There has been a torrent of activity over the last few days over the August 8 deadline for declaring corporate compliance with New York’s infamous BitLicense regulation.
Many companies have chosen to opt-out of the regulation and the New York State market altogether. This verdict seems to also apply to the popular Bitcoin wallet provider and peer-to-peer exchange LocalBitCoins.com, who has posted a message on their site regarding this lightning rod legal issue.
The Localbitcoins community manager, Max, posted this statement publicly:
“We’re sad to say that due to regulators another region has had to be blocked from LocalBitcoins. From today onwards users from New York are no longer allowed to use LocalBitcoins because of the legislation known as the BitLicense (23 NYCRR 200) which makes it a federal offense to sell virtual currency unless you have applied for the license.
This new regulation would require anyone selling Bitcoins through our service to acquire the Bit License if they sell Bitcoins to residents of New York. As the Bit license is time consuming, expensive and difficult to obtain for anything but large companies we’ve taken the decision to protect our US based traders and not allow New York based users to use our service.
If you reside in the US, you will get a one-time pop up notification requiring you to confirm whether or not you live in New York. All new users will equally have to answer the same question.
This is an unfortunate state of affairs and we hope that the regulation will in the future accommodate small time bitcoin sellers who do not have the possibility to comply with regulations made for big financial institutions.
For the time being though, we bid New York farewell”.
Are you a New Yorker?
Upon entering the website, particularly if you reside in the US, you will get a one-time pop-up notification or “lightbox" on your screen. You will not be able to continue using LocalBitCoins.com until you answer one very important question.
BitLicense has proven to not only send Bitcoin business anywhere else but New York, but it ultimately hurts the state’s residents the most. Impressively, this BitLicense edict would imply that New York regulators can discern the state of residency of every Bitcoin owner, user, or every transaction going forward, in order to enforce this regulatory mandate.
For U.S. tax purposes, you’re supposed to declare any Bitcoin transactions that result in capital gains. But what if you just wanted to buy and hold bitcoin, as a hedge against inflation, or against an impending currency collapse? It seems this would be a non-option for the unfortunate residents of New York state unless they deal only with BitLicense-certified companies.
Would New York residents be criminalized in a similar fashion to a drug smuggler for buying bitcoin from an unlicensed Bitcoin services provider? The goal may be to make it so onerous and inconvenient to obtain or transfer bitcoin that any would-be competitor, startup or disruptive fintech service are barred from doing business in the state without paying a hefty fee. This seems to be the net effect of the legislation.
The price of an apartment is not the only thing that is incredibly high in New York. So is the price of economic freedom.
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There has been a torrent of activity over the last few days over the August 8 deadline for declaring corporate compliance with New York’s infamous BitLicense regulation .
Many companies have chosen to opt-out of the regulation and the New York State market altogether. This verdict seems to also apply […]