Newspaper article International New York Times

Proposed Legislation Divides Bitcoin Fans

Newspaper article International New York Times

Proposed Legislation Divides Bitcoin Fans

Article excerpt

Bitcoin supporters have had a mixed reaction on whether New York's planned rules will help legitimize the virtual currency or thwart innovation.

A new front has opened in the battle over Bitcoin.

Since New York became the first state to propose virtual currency regulations two weeks ago, Bitcoin enthusiasts have had a mixed reaction on whether the new rules would help legitimize the virtual currency or whether they would thwart innovation and threaten the very freedom that Bitcoin was meant to promote.

The draft legislation has also exposed a division among virtual currency companies with enough resources to comply with the possible regulations and those without.

On Tuesday, some Bitcoin supporters sent an open letter to Benjamin M. Lawsky, New York State's top financial regulator, requesting more time to comment on his proposed legislation.

"Many of us are individuals or small start-ups operating on limited budgets without access to extensive legal resources," the letter states. "This imposes a substantial burden as we seek to understand the proposed rules and their current and future impacts on our businesses, open-source projects and educational research." The letter also refers to "inconsistent statements" and opaque language in the draft regulations.

The letter, which has about 400 signatures, including many big names in the virtual currency industry, says the commenting period of 45 days is not enough time for interested parties to provide adequate feedback on "both the broad scope and detailed components of the proposed rules." The letter requests 45 additional days.

"We really want to make this a collaborative and engaging process with regulators," said Austin Walne, who wrote the letter. "We want to have a dialogue, and we want more time to have it."

A self-described technologist and Bitcoin enthusiast, Mr. Walne teamed up last week with Elizabeth Stark, an entrepreneur, to gauge reaction to the letter. The response, they said, was overwhelming. Hundreds of people, including executives from Bitcoin companies backed by venture capital, as well as students and users of Reddit, signed the letter.

Among those who have added their signatures are Barry Silbert of SecondMarket, who runs a Bitcoin investment fund, and executives from the Bitcoin company BitPay.

When it was introduced in 2009 by a programmer, or group of programmers, Bitcoin appealed to anti-establishment enthusiasts and technology buffs who operated on the fringes of the financial system. Now, as virtual currency becomes more accepted in the mainstream, start-ups could find themselves unable to comply with regulations that seem to favor more established financial companies.

"If only companies that have already raised tens of millions of dollars in funding can succeed, we can say goodbye to the Bitcoin start-up ecosystem," Ms. …

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