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The Tactics of the BitLicense

“We’re not the kind of agency that thinks we have a monopoly on the truth and that we’re always right. We feel strongly about a lot of the provisions in the proposed regulations, but we get that there might be things we can improve.”  –Benjamin Lawsky

Shortly following the proposed BitLicense, a significant portion of the bitcoin community wrote and signed a letter to the New York Department of Financial Services, pleading for an extension. The extension was granted. The NYSDFS is cooperating. Lawsky wants the best for the future of bitcoin in New York. Governments never lie. Regulations always work. And history never rhymes.

As soon as these regulations were proposed, it was clear how things would unfold.

  1.      The NYSDFS would wait for people to make noise and complain.
  2.      The NYSDFS would pretend to listen, using Lawsky as a friendly mediator.
  3.      The bitcoin community would proceed to be tricked into a false sense of security because we would feel that our opinions are being taken into consideration.
  4.      Because these regulations were written with the foresight that corrections would need to be made, they were purposefully written to be insultingly overreaching.
  5.      At the end of this extension, the NYSDFS will cut out the most extreme sections of the BitLicense, and leave us with the regulations they always intended us to have.
  6.   We will thank Lawsky and the NYSDFS for allowing us to do bitcoin related things, sort of.

That is the nature of the BitLicense; or as I like to call it, the ban on blockchain innovation in New York. We must all remember that bitcoin is not inherently monetary, that the blockchain is simply a protocol, which is language, which is speech, which is supposed to be protected under the 1st Amendment. Most are not yet believers, but blockchain technology is the next step in internet evolution.

Imagine 20 years earlier on July 17, 1994, the IntLicense was released to the world for a 45 day review period by the public: Would the majority of Americans know how to reply? How different would our world look today? Would we still have companies like Facebook, Twitter, Netflix, Google and countless other forms of technology we now take for granted. 1994 was a very critical time for the Internet as the first browser was just about to make its official press release on October 13th and people were just starting to get the feel for the AOL instant Messenger and this radical new technology called email.” –Tone Vays

Tone (with modest contributions from myself) has taken the liberty of rewriting the proposed BitLicense. By altering a few of the document’s definitions, such as “Virtual Currencies” to “Virtual Communication”, “Anti-Money Laundering” to “Anti-Anonymous Communication”, and “Compliance” to “Copyright”, we can get a glimpse into what may have been.

Imagine if every blogger had to hire a “copyright” agent. Imagine if every time you wanted to post a comment online, your identity had to be confirmed. Imagine you had to get copyright permissions cleared before you could write anything, or link to content. It’s easy, just think of a blank internet.

Here are some highlights of the altered license:

Section 200.3 License

(a) License required. No Person shall, without a license obtained from the superintendent as provided in this Part, engage in any Virtual Currency [Communication] Business Activity.

(b) Unlicensed agents prohibited. Each Licensee is prohibited from conducting any Virtual Currency [Communication] Business Activity through an agent or agency arrangement when the agent is not a Licensee.

(c) Exemption from licensing requirements. The following Persons are exempt from the licensing requirements otherwise applicable under this Part:
(1) Persons that are chartered under the New York Banking [Commerce & Telecommunication] Law to conduct exchange [knowledge transfer] services and are approved by the superintendent to engage in Virtual Currency [Communication] Business Activity

———————–

Section 200.15 Anti-money laundering [Anti-anonymous communication] program

(1) Records of Virtual Currency [Communication and] transactions. Each Licensee shall maintain the following information for all [communication and] transactions involving the payment, receipt, exchange or conversion, purchase, sale, transfer, or transmission of Virtual Currency [Communication or Commerce]: the identity and physical addresses of the parties involved, the amount or value of the transaction, including in what denomination purchased, sold, or transferred, the method of payment, the date(s) on which the transaction was initiated and completed, and a description of the transaction.

————————–

Section 200.19 Consumer protection

(1) virtual currency [communication] is not legal tender [speech], is not backed [endorsed] by the government, and accounts and value balances [controversial statements] are not subject to Federal Deposit Insurance Corporation [1st Amendment Protections] or Securities Investor Protection Corporation protections [4th Amendment Protections against diary and ‘private papers’ searches];

—————————-

Section 200.15 Anti-money laundering [Anti-anonymous communication] program

(3) Reporting of Suspicious Activity. Each Licensee shall monitor for [communication and] transactions that might signify money laundering [anonymous communication], tax evasion, or other illegal or criminal activity and notify the Department, in a manner prescribed by the superintendent, immediately upon detection of such a [communications and] transaction(s).

Section 200.18 Advertising and marketing

(a) Each Licensee engaged in Virtual Currency [Communication] Business Activity shall not advertise its products, services, or activities in New York or to New York Residents without including the name of the Licensee and the legend that such Licensee is “Licensed to engage in Virtual Currency [Communication] Business Activity by the New York State Department of Financial Services.”

Click here to see the IntLicense in its entirety.

We are at a crossroad with bitcoin regulation and if we don’t see these regulations for what they are–a restriction of not just commerce but speech–then we are missing the larger picture and the point that these people have every reason to stifle innovation for their own gains.

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Hands off Bitcoin: Model Legislation

The New York Department of Financial Services (NYDFS) last month rolled out a proposal to regulate “virtual currency businesses” worldwide if the company had at least one customer within the Empire State. In response, the Intergalactic Bit License was created, with Davi Barker stating, “we can laminate stuff, too.”

Also in response to this proposal came model legislation – I know, not something you’re used to seeing on BNB. Though drafted specifically to be introduced in the New Hampshire Legislature, this model legislation can be used anywhere – the only modifications needed would be to the “new section” to be added, the location, and the agencies to be affected. A bit of irony is that the definitions used in this model legislation all came from the proposal by NYDFS. The NYDFS used these definitions as things that would require a special license; whereas, the intent of this proposal is to prevent regulatory agencies from implementing broad regulations over what should be self-regulated decentralized currencies.

Relative to Virtual Currencies
New section 383:9-k
The New Hampshire Banking Department, and the Bank Commissioner shall not have authority to regulate any Virtual Currency or Virtual Currency Business Activity as defined in this chapter.
Virtual Currency means any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology. Virtual Currency shall be broadly construed to include digital units of exchange that
(1) have a centralized repository or administrator;
(2) are decentralized and have no centralized repository or administrator; or
(3) may be created or obtained by computing or manufacturing effort.
Virtual Currency shall not be construed to include digital units that are used solely within online gaming platforms with no market or application outside of those gaming platforms, nor shall Virtual Currency be construed to include digital units that are used exclusively as part of a customer affinity or rewards program, and can be applied solely as payment for purchases with the issuer and/or other designated merchants, but cannot be converted into, or redeemed for, Fiat Currency;
Virtual Currency Business Activity means the conduct of any one of the following types of activities involving New Hampshire or a New Hampshire Resident:
(1) receiving Virtual Currency for transmission or transmitting the same;
(2) securing, storing, holding, or maintaining custody or control of Virtual Currency on behalf of others;
(3) buying and selling Virtual Currency as a customer business;
(4) performing retail conversion services, including the conversion or exchange of Fiat Currency or other value into Virtual Currency, the conversion or exchange of Virtual Currency into Fiat Currency or other value, or the conversion or exchange of one form of Virtual Currency into another form of Virtual Currency; or
(5) controlling, administering, or issuing a Virtual Currency.

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Intergalactic BitLicense; We can laminate stuff too!

Bitcoin Not Bombs is getting compliant and now so can you! After seeing a market demand for compliance and BitLicenses, Bitcoin Not Bombs has opened up shop on New New York, Mars as BitLicenseLLC and is now issuing Intergalactic BitLicenses. We’re all wracked with anticipation as benevolent regulators devise new ways to protect us. So, we wanted our licenses to cover the broadest geographic area possible to ensure that you feel safe and compliant no matter where your travels take you–including deep space. We aim to provide the coolest, most versatile BitLicense on the market. Whether being stopped and frisked in New York City or being body scanned on Remulak, you can rest assured this Intergalactic BitLicense will cover you when you need to show that compliance with the law is not an issue.

Bitcoin Not Bombs is committed to offering the most accessible BitLicense on the market, and we have partnered with Bit.co.in to provide a way to register your address in the Namecoin Blockchain. By using blockchain technology and Bit.co.in we significantly cut the bureaucratic fat and pass the savings on to you! Adding your address to the blockchain makes your record public and irrevocable by third parties of any kind.

Order process: Fill out the application below, and we will email you your free digital Intergalactic BitLicense. Once you have received your digital license you will have the option to buy a physical card that you can carry around and show whenever you need to remind any galactic SS officer of your financial freedoms. Please allow 4 to 6 weeks for delivery.*

*To allow time for your application to be signed in triplicate, sent in, sent back, queried, lost, found, subjected to public inquiry, used as a coaster, lost again, and finally buried.

BitLicenseLLC is not responsible for any lost, stolen, or otherwise altered applications. In the event Intergalactic Laws change, you should probably ignore them anyway. Bitcoin is the honey badger of money and don’t need no stinkin’ laws.

BitLicenseLLC will delete any and all record of your BitLicense after 45 days. If you have any problem with your application or physical card please email: Bit License (at) Bitcoin Not Bombs (dot) com or send us a tweet.

Please provide your email address and bitcoin address to start the application process. Short URL sites such as Bit.co.in, OneName.io and Sendcoins.to are optional but interesting tools to learn about and can be used.