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International Justice League of Super Acquaintances, unite! Oh, wait, wrong group – but you have to admit it rolls off the tongue better than "Technologists, consumers, institutional and small investors, large and small blockchain enterprises, and academics, unite!"
On January 2, Clyde Vanel, a New York assemblyman who chairs the Subcommittee on Internet and New Technologies, announced that New York state will set up its own dedicated crypto task force. The team – comprised of the motley crewmembers listed above – will be responsible for studying how to define, regulate, and use cryptocurrencies. Vanel proposed the idea for a task force in November 2017 in a separate bill. According to Vanel's post, Governor Andrew Cuomo signed "The Digital Currency Study Bill" at the end of last month, creating the task force and asking that the panel submit reports on cryptocurrencies and blockchain technology by December 15, 2020.
NY's Got 99 Problems and BitLicense Is Almost All of Them
"New York leads the country in finance," Vanel said in his announcement. "We will also lead in proper fintech regulations." While Wall Street makes New York a financial icon, not everything is perfect about the state's handling of blockchain and cryptocurrency enterprises.
In 2015, the New York State Department of Financial Services (NYDFS) published the "Regulations of the Superintendent of Financial Services Part 200. Virtual Currencies," a law commonly known as BitLicense. The licensing framework covers "virtual currency business activity," specifically any business engaging in virtual currency activities involving New York state or individuals that reside, have a place of business, or are conducting business in New York.
The BitLicense regulations were so notoriously complicated that after the legislation was passed, its primary author, Benjamin Lawsky, founded The Lawsky Group, a company that provides financial consulting services to those requiring a BitLicense.
According to a NYDFS press release from November 2018, only 12 licenses have been approved since the law was introduced. During the BitLicense Panel at Consensus 2018 in May, the founders of Kraken and ShapeShift both spoke out about leaving New York and the state's stringent policy.
Fixing a Hole
The crypto task force bill (A8783B) is backed by legislators that are itching to move on from current licensing regulations. Ron Kim, a New York assemblyman and co-sponsor for the task force bill, introduced his own bill in March 2018. Kim wants to eliminate BitLicense in favor of a regulatory sandbox, prohibit licensing fees – which start at $5,000 under BitLicense – and promote FinTech startups.
New York Assemblyman Ed Ra, too, is hopeful that the task force will bring together the right people to create a more abundant crypto environment for the state. Ra is quoted in Vanel's announcement as saying, "New York must properly balance consumer protection with creating an environment ripe for investment and innovation in New York State. Convening experts and stakeholders is a good step forward."
It's far too early to say whether this task force will overhaul the regulations set up in the BitLicense law. Vanel points out that legislation has a hard time keeping pace with technological developments: "It has been nearly four years since the implementations of the BitLicense. In the cryptocurrency space and technology in general, a few months is equivalent to years."
It isn't anything definite, but clearly, BitLicense's seemingly outdated methods are on Vanel's mind.