Op-Ed: New York’s Pathetic Attempt to Regulate Crypto

My friend D.C. sent this message to a group of us Bitcoiners through a messaging app while visiting N.Y. recently, “I’m in New York and just tried to log onto ShapeShift. This is what I got (on my computer screen).”

“CENSORED IN NEW YORK

This service is censored in New York State due to regulations which mandate the extraction of your personal, private, information. This jeopardizes your safety, so we refuse to do it.

WHY IS THIS WEBSITE BLOCKED

We are committed to consumer protections that have been outlawed in New York State.

We believe it is reckless and ethically impermissible to extract, personal, private information from our users. If it is not necessary for the service they’re using. Companies which capture this information expose their users by needlessly storing sensitive data in a central, which inevitably becomes a target for hackers and other malicious hackers.

Even multinational companies and trillion-dollar governments have been unable to build a track record of data security.”

My first thought was, “SERIOUSLY?”

Gotta love New York, and it’s draconian crypto laws. Of course, the state is known for its infamous BitLicense requirements, a business license for digital currency activities. In this case ShapeShift, the leading instant digital asset exchange, supporting dozens of blockchain tokens including Bitcoin, Ethereum, Monero, Zcash, Dash, and Dogecoin is prohibited from operating there because of onerous laws enacted by the State of New York.

And not just in New York City, but the entire State. The BitLicense regulation has made life extremely miserable for cryptocurrency companies there. In fact, only a small number of businesses have been approved for a BitLicense there.

The message being sent by N.Y. regulators? Do your crypto business elsewhere.

The above notice D.C. received on her computer stated among other things:

“Companies which capture this information expose their users by needlessly storing sensitive data in a central, which inevitably becomes a target for hackers and other malicious hackers.”

What’s so laughable about this statement is that ShapeShift has a policy of not collecting a morsel of personal data on its customers. Moreover, all transactions exchanged from one cryptocurrency to another occurs without any customer funds being held in company accounts, a feature which is unique among digital currency trading businesses.

If New York was so intent to outlawing sensitive data storage in order to prevent hacks, then why are they allowing the credit reporting agency Equifax to operate in the state. Or even the bitcoin exchange Coinbase?

Shouldn’t these two companies in question have received increased scrutiny by virtue of the fact that they are both CENTRALIZED and highly susceptible to attacks?

By the way, I’m rather certain that when Shapeshift was told to apply for one of these coveted BitLicenses, they gave the State of New York the middle finger.

In my humble opinion, regulations like this are not the answer as far as cryptocurrency is concerned for this practice of regulatory overreach runs the risk of stifling the massive growth and innovation taking place in the crypto/blockchain sector.

The fact that crypto companies will just take their business elsewhere due to these should concern state regulators. But it likely won’t. So their loss.

In the meantime, my friend D.C. closed with the following on the message board:

“I’ll use a VPN (in effect steering around the blocked site). But I still don’t like the government blocking website usage freedom.”

Enough said.