The Bitcoin regulatory measures in the state of New York are causing quite a bit of controversy. Right now, there are more companies halting their service in this part of the world compared to the number of applications for a BitLicense. Even though regulation is necessary, too severe regulation leads to a mass exodus of companies. One of the few major Bitcoin companies completely unaffected by this regulatory measure is Bitcoin wallet provider Airbitz.
Mobile Bitcoin Wallet Providers Not Affected By BitLicense (For Now)
The main concern regarding New York state’s BitLicense regulation is whether or not individual users or companies are forced to apply for a BitLicense themselves. Doing so will invoke hefty application and legal fees, with the total bill mounting up to US$25,000 or more in a short timespan.
It goes without saying that most individuals and companies do not have the funds to pay for a BitLicense, but that is not the main reason so many businesses are halting their services in New York. State officials also require thorough details to be kept regarding every customer using the Bitcoin service provided and it remains unclear as to how this data will be used in the future.
This invasion of privacy does not sit well the the Bitcoin industry leaders, who are the official voice of the Bitcoin community in this matter. By fighting back against BitLicense regulation and deciding to take business elsewhere, they hope to set an example for further revision of these requirements. Whether or not this will be the case, remains to be seen.
One type of Bitcoin business that remains unaffected by these types of regulatory requirements are mobile Bitcoin wallet providers. Unlike web wallet services, companies such as Airbitz do not touch customer funds directly, which indicates the company is not a money transmitter by any means. Web wallet providers accept deposits and process withdrawals on behalf of the customers, and are therefore digital money transmitters who will need to apply for a BitLicense.
New York citizens can keep on using the Airbitz mobile Bitcoin wallet without any issues, as it doesn’t matter where the users are located. Airbitz never holds users’ Bitcoin themselves, as they are stored on the mobile device itself and in sole possession of the end user. Decentralization in its truest form is at work here and the Airbitz team wants to remind people of why this term is so important for their [financial] future.
Regulatory Measures Applicable To Centralized Companies Only
What makes the BitLicense regulatory requirements so interesting is that they only apply to centralized services. Bitcoin was designed to remove the need for centralised serviced and third parties, such as traditional Bitcoin exchanges. Yet somehow, a large part of the Bitcoin community still relies on centralized services for their virtual currency needs.
However, there is one exception to this rule. Decentralized peer-to-peer Bitcoin marketplaces, such as LocalBitcoins, are not completely safe from harm either. The company announced it will halt all services in the New York state area soon. Otherwise, every individual Bitcoin seller in that area would have to apply for a bitLicense, which is simply unacceptable.
Source: Airbitz Blog
Images courtesy of NYDFS, Airbitz, Shutterstock