The growing popularity of Bitcoin is finally pushing governments and regulators to create a legal space for this new and disruptive industry. However, the new legal space is also bringing some additional responsibilities for Bitcoin startups, which — at times — feel too difficult to comply with. Among one such responsibility is following the prevailing anti-money laundering and know-your-customer laws.
Let’s face it: Bitcoin does have a strong foothold in criminal industry. Its secretive and anonymous features assist criminals in buying/selling illicit products, funding terrorist activities and conducting money laundering on web. The governments therefore put burden on companies that support digital currency transactions, only to make sure that no criminal gets to use Bitcoin for illegal activities. The compliance, however rightly motivated it may seem, adds nothing but workload for underprivileged startups, for they find it difficult to maintain records of each and every users within a limited timeframe.
Just very recently, New York’s highly controversial Bitcoin law, the BitLicense, literally forced local Bitcoin companies to draw out their banners from the state. A most of these companies, including cryptocurrency exchange ShapeShift, claimed that the new law stifles a fledgling privacy-supporting industry. In addition to this, the companies also complained how