Effort to Ease New York's Onerous Crypto Exchange Rules
Mar 20, 2018
Initial coin offerings, similarly to initial public offerings for stocks, allow startup companies to raise the capital necessary to accelerate growth and business development. Due to the speculative and unregulated nature of cryptocurrencies, however, the potential for fraud in these offerings has become a significant concern. As such, regulatory bodies have begun to put in place stringent restrictions and guidelines which require companies to meet certain specifications. In the state of New York, these guidelines have become so challenging to comply with that since 2015, only a few companies have been able to qualify for an ICO. As Leigh Cuen explores in her piece “This New York Lawmaker Wants to End the BitLicense”, several lawmakers are beginning to push back, claiming that the restrictions are too exclusive.
In her article, Cuen details the efforts of Ron Kim, an assemblyman working on behalf of cryptocurrency startups. Kim has proposed a bill in the New York state legislature that if successful, would eliminate “BitLicenses” from New York. BitLicenses are the regulatory framework currently in place in New York which have established the benchmark that startup crypto companies must meet. Kim’s bill would continue to impose regulations on cryptocurrency startups such as requiring mandates for cybersecurity, record-keeping, and investment insurance to protect customers. These restrictions, though less demanding than what is required for BitLicenses, would be a compromise that both protects the consumer but also allows startups to meet requirements within reason. Kim has hopes that this bill will begin the path to becoming a law by this summer but has concerns that it could take until early 2019 for the process to start.
Kim posits some of the potential benefits that can be derived from allowing more crypto startups to raise funding, the most significant being the potential revenue stream that New York can capture by allowing more cryptocurrency exchanges to grow. This may be a very appealing proposition for a state facing an estimated budget deficit of $4 billion in 2018, and may be enough of an incentive for this bill to gain tangible consideration.
To read the full article cited click here.