Delayed Bitcoin ETFs, subpoenas, and blockchain businesses forced to close, Bitcoin regulation in the U.S. is hardly encouraging innovation. If you’re looking for friendly pastures for your cryptocurrency company, avoid these three states at all costs.
1. New York
New York has consistently hit the top of the list for its unsympathetic Bitcoin regulation. Its infamous BitLicense has been called out as “regulatory overreach” by many a key figure in the industry. These include ShapeShift’s Erik Voorhees and Kraken’s Jesse Powell.
Speaking at Consensus in New York last year, Voorhees stated:
Here we are two miles from the Statue of Liberty and you cannot sell CryptoKitties in the state without that license. That’s the absurdity of what’s happened here.
Powell meanwhile spoke out against the former New York Attorney General Eric Schneiderman. He sent Kraken a request for customer information a full three years after the exchange had stopped doing business in New York.
New York’s BitLicence has forced many a crypto company out of the state, highlighting the fact that regulation at a federal level is needed.
Under the stipulations of BitLicence, exchanges have to disclose all information about their entire global client base. This is something not only abhorrent to most customers but also potentially illegal. Other countries have different privacy laws from the United States.
However, a change may be on the horizon. New York’s Governor Andrew Cuomo recently signed a digital currency study bill creating the first cryptocurrency task force in the US. This will comprise technology and blockchain experts, as well as investors and researchers.
The task force’s goal is to promote a healthier cryptocurrency economy while protecting New York investors. Time will tell if it’s a success or yet another case of regulation on steroids.
2. Rhode Island
Rhode Island recently earned a place on this list as one of the worst states for Bitcoin regulation. Senator Sheldon Whitehouse labeled cryptocurrencies as an easy way for “foreign interference” in American elections. He also laid out new tax regulations for virtual currencies.
The new Rhode Island Senate Bill No. 251 is called “An act relating to taxation — sale and use tax–non-collecting retailers, referrers, and retail sale facilitators act.” Apparently, the intention of the bill is to:
Assess sales tax on marketplace facilitations, including those that provide cryptocurrencies used by buyers to pay for services.
In other words? Make doing business a whole lot harder for blockchain businesses in the state. Wall Street veteran and cryptocurrency supporter Caitlin Long was quick to criticize on Twitter.
She said that companies should just leave states that prevent blockchain innovation and strangle research and development:
ARE YOU KIDDING?? Check out #RhodeIsland #crypto tax proposal—it’s so broad that it includes taxing software development + R&D. Get out of states that show by actions they don’t want #blockchain cos & come to #Wyoming where we do! @Tyler_Lindholm @SenatorDriskill @GordonGovernor https://t.co/We4n3hNkIx
— Caitlin Long (@CaitlinLong_) February 10, 2019
Long has made headlines lately by helping the Wyoming state to set out clear regulations that welcome and attract blockchain companies. Wyoming has even introduced bills to support cryptocurrencies as legal tender.
This is far from the backward, draconian case of Rhode Island that still associates cryptocurrencies with criminal activity–and Russia.
Another newcomer to this list, blockchain attorney Drew Hinkes posted yesterday that Arizona had just become the next hostile state when it comes to Bitcoin regulation. Arizona is proposing a bill that imposes sales tax on marketplace facilitators that accept or require virtual currencies, following the lead from Rhode Island.
#Arizona, come on down! You’re the next state to propose a bill to impose sales tax on marketplace facilitators who require/allow #virtualcurrencies to be used by purchasers to buy products from sellers. Includes the broad “software development” clause flagged by @CaitlinLong_ pic.twitter.com/xuaSu8Yysr
— Drew Hinkes (@propelforward) February 12, 2019
To this, Caitlin Long responded that if the bill came into law it would make Arizona one of the three worst states for Bitcoin regulation–along with Rhode Island and New York.
ANOTHER ONE—UGH!!! #Arizona was previously one of the #blockchain friendliest US states, but if this bill becomes law it will join #RhodeIsland & #NewYork as the worst. HOW DARE YOU TAX SOFTWARE DEVELOPMENT AND R&D??? #idiotic @propelforward @Tyler_Lindholm https://t.co/x4AvIdVt8g
— Caitlin Long (@CaitlinLong_) February 12, 2019
The takeaway? The States is hardly known for its crypto-friendly regulation. But if you want to make things easier on yourself, avoid these three states like the plague.
What other states should be added to the list? Let us know below!
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