Coin Center, a Washington DC headquartered non-profit research and advocacy center focused on the public policy issues facing cryptocurrency technologies like Bitcoin and Ethereum, has come out against the latest version of California’s proposed new BitLicense law.
In the absence of a federal approach to the subject, individual American states have crafted their own regulations for blockchain businesses. However, the impression from the new law is that the California Legislature is not concerned that the state will have to compete with far more blockchain business-friendly states such as North Carolina to hold on to startups.
Calling the bill a step backwards, Coin Center’s Executive Director Jerry Brito and Research Director Peter Van Valkenburgh on Tuesday expressed grave concerns about the final iteration of the law despite supporting earlier version in the past. Among these grave concerns is that the law offers no clarity on the need for separate money transmission licensing, enrollment costs $5,000 and that failure to enroll can result in fines of up to $25,000 per offence.
The seemingly most crucial issue is that law might require a licence not just from retail clients facing exchanges but from all types of blockchain developers. “The bill would cover multi-sig and key-recovery providers who do not have sufficient keys to transact. It would cover those who run full-nodes, those who mine digital currencies, and those who participate in off-chain payment channels like the lightning network. It would cover those who develop new digital currencies and “issue” new tokens, or companies that help build scaling solutions like side-chains. It would even cover a host of activities that constitute nothing beyond developing and running free and open source software on an internet connected computer.”
They inform members that they are in contact with the state legislature, providing them with detailed analyses and hope that the bill will be amended. “If we can’t achieve these changes in short order, we’ll have to work together to oppose this new anti-innovation bill.’
Coin Center’s existing supporters include the likes of Andreessen Horowitz, BitPay, BitFury, BitGo, Chain, Coinbase, Ledger, OKLink, Ribbit Capital, Union Square Ventures, and Xapo. In February it was revealed that the lobby raised over $1 million to fund its 2016 operations, with help from 21, Bitstamp, Blockstream, Digital Currency Group, Gem, Genesis Global Trading, Grayscale Investments, Netki, Onename, Overstock.com, and Virtual Capital Ventures, as well as “several very generous private individuals.”