9 ms·

Proposed New York State Virtual Currency Regulations [pdf]

91 points by mdelias 12y ago

rektide 12y ago
Rrriiight. Good luck making it past the Commerce Clause, trying to thieve what is an enshrined Federal power ("To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes"). Who are these chumps that so enjoy playing with themselves in the public forum? Why do they think they're not stepping all over the constitution by imposing burdens on commercial activities that happen to intersect with NY?
- murbard2 12y ago
  They'll have no problem making it past of the commerce clause. The law doesn't matter, politics do. The rule of law is not a self-enforcing principle, it's a political equilibrium built around a consensus. Checks and balances mean that it's somewhat detrimental to depart from this consensus, which is why it's stable. However, it's not a very tight equilibrium. The restoring forces are weak, and they keep weakening over time.
- natrius 12y ago
  "Why do they think they're not stepping all over the constitution by imposing burdens on commercial activities that happen to intersect with NY?" Because they regulate plenty of financial activity that happens to intersect with New York already.
- wyager 12y ago
  NY is not known for following the constitution.
- bjt 12y ago
  The states are what give the constitution its authority, not vice versa. The commerce clause is part of the fed govt's "enumerated" powers, meaning that the fed govt only has the powers listed in the Constitution. The states, however, have the "police power", letting them pass pretty much whatever laws they want. When it comes to the commerce clause, courts have decided to let states do what they want, more or less, unless a specific federal law "preempts" the state one.
hawleyal 12y ago
This is old. The guy did an AMA a while back. http://www.reddit.com/r/IAmA/comments/1ygcil/as_requested_im_ben_lawsky_superintendent_of_the http://www.reddit.com/r/IAmA/comments/1ygcil/as_requested_im...
- natrius 12y ago
  This is not old. The proposed regulations were released today.
dmix 12y ago
Here is a Reddit comment breaking down the proposal: http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nydfs_here_are_the/cizyqyz http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_b...
- mrfusion 12y ago
  This line saddened me, "In fact, Satoshi would have commited a crime creating Bitcoin without registration. (200.2n5)"
  - bobbygoodlatte 12y ago
    Well, Orville Wright didn't have a pilot's license :)
- broolstoryco 12y ago
  Here is a better thread http://www.reddit.com/r/BitcoinMarkets/comments/2ayenj/press_release_ny_dfs_releases_proposed_bitlicense/ http://www.reddit.com/r/BitcoinMarkets/comments/2ayenj/press...
mrfusion 12y ago
What happens if the entities aren't based in NY?
- wmf 12y ago
  If they have any customers in NY they need to follow NY laws. This is one of the problems with money transfer laws in the US.
  - _archon_ 12y ago
    This is an interesting question and answer. I personally believe that legislation will be forced to change so that de jure can more closely resemble de facto... But this will not happen (anytime soon) while NY lawmakers think they can tax or regulate something.
  - deleted 12y ago
    [deleted]
innguest 12y ago
This is absolutely ridiculous. That some part of "The Government" thinks they can regulate something that is not theirs is laughable. They've done (and continue to do) enough harm regulating their fiat currency. Who gives them the right, and more importantly, how can they be so delusional to think they can actually regulate something that is built in such a way as to be regulation-proof? Where's the torrent regulation PDF? These folks are clowns.
- wmf 12y ago
  It sounds like you're saying that if I create something I can simply declare it to be exempt from any laws I don't like. The whole point of laws is that they're not voluntary. As for torrents, there is that thing called copyright law.
  - innguest 12y ago
    Yes, and how has copyright law been faring on the face of torrents? What I'm saying is that it's silly to try and regulate things that are mathematically designed to withstand any regulation. I do not believe unenforceable laws are the way to go. If the government prefers that we do things differently then it should lead by example, convince by arguments, etc, just like anyone else. Instead they're acting childishly by passing laws that regulate something they don't even understand, and that ultimately are not amenable to regulation.
    - wmf 12y ago
      it's silly to try and regulate things that are mathematically designed to withstand any regulation So basically a might-makes-right war of all against all. Gotcha. That concept isn't in much favor these days.
    - _delirium 12y ago
      Bitcoin is not "mathematically designed" to withstand regulation. The mathematical aspect of the system involves only its technical operation; it's designed to avoid certain classes of technical attacks on the system. If anything, it's more amenable to certain types of regulation than cash is—paying someone in cash doesn't make an entry in a public blockchain.
vinalia 12y ago
I understand the state's fear after the Mt. Gox fallout but their effort seems too overreaching. How could they possibly enforce _all_ citizens and businesses involved in cryptocurrencies to have licenses, hold 10 years of records, etc.? OTOH, would there be a way to hold currency exchanges legally accountable without breaking cryptocurrencies? There are too many stupid exchanges that scam peoples' coins and this seems like a barrier to adoption for lots of people. It would be nice to just push $100 from a bank account into a bitcoin account (like paypal does).
- wcummings 12y ago
  > It would be nice to just push $100 from a bank account into a bitcoin account (like paypal does). Literally coinbase
  - wmf 12y ago
    Which may become literally illegal under these new regulations.
olalonde 12y ago
> Retained earnings and profits of in invested in US dollars. They may not keep any profit in Bitcoin. (200.8b) Bitcoin businesses cannot keep profits in Bitcoin? This is just too ridiculous to be true...
paulrr 12y ago
Matt Levine has excellent commentary on this: http://www.bloombergview.com/articles/2014-07-17/bitcoin-banking-will-be-boring http://www.bloombergview.com/articles/2014-07-17/bitcoin-ban...
blazespin 12y ago
Ben Lawsky posts on Reddit: http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nydfs_here_are_the/ http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_b...
tjaerv 12y ago
Erik Voorhees's response, at length: http://moneyandstate.com/reflections-right-privacy-response-nydfs-bitcoin-proposal/ http://moneyandstate.com/reflections-right-privacy-response-...
zaroth 12y ago
Wow, this is down in the weeds. E.g. (4) include procedures for the maintenance of back-up facilities, systems, and infrastructure as well as alternative staffing and other resources to enable the timely recovery of data and documentation and to resume operations as soon as reasonably possible following a disruption to normal business activities; ... (3) Source code reviews. Each Licensee shall have an independent, qualified third party conduct a source code review of any internally developed proprietary software used in the Licensee’s business operations, at least annually. A lot of these regs may have started out as Best Practices, but shouldn't regulations focus on the What, not the How? Also, the right place for these regs, if we must have them, are under FinCEN at the Federal level. If you watch some of their presentations, some smart people working there whom I'm sure would love to tackle this in a way that doesn't create an quagmire of conflicting and overlapping state regs. A little passage in some old document about interstate commerce comes to mind. The great thing about Bitcoin is this only applies to 3rd party companies wanting to assist you in transferring bitcoin, it doesn't apply at all to individual transfers between private entities. So this will do a lot to encourage private wallet software over centralized points of failure and intelligence gathering. For that, at least, you can thank NY.
deleted 12y ago
[deleted]
fiatjaf 12y ago
If you thing the State will ever do the right thing then you're wrong.
random8799 12y ago
Desperation... haha, Bless their hearts for trying. 18th century paper proclamations/thinking only go so far as technology progresses...

91 points by mdelias 12y ago

Rrriiight. Good luck making it past the Commerce Clause, trying to thieve what is an enshrined Federal power ("To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes"). Who are these chumps that so enjoy playing with themselves in the public forum? Why do they think they're not stepping all over the constitution by imposing burdens on commercial activities that happen to intersect with NY?

murbard2 12y ago
They'll have no problem making it past of the commerce clause. The law doesn't matter, politics do. The rule of law is not a self-enforcing principle, it's a political equilibrium built around a consensus. Checks and balances mean that it's somewhat detrimental to depart from this consensus, which is why it's stable. However, it's not a very tight equilibrium. The restoring forces are weak, and they keep weakening over time.
natrius 12y ago
"Why do they think they're not stepping all over the constitution by imposing burdens on commercial activities that happen to intersect with NY?" Because they regulate plenty of financial activity that happens to intersect with New York already.
wyager 12y ago
NY is not known for following the constitution.
bjt 12y ago
The states are what give the constitution its authority, not vice versa. The commerce clause is part of the fed govt's "enumerated" powers, meaning that the fed govt only has the powers listed in the Constitution. The states, however, have the "police power", letting them pass pretty much whatever laws they want. When it comes to the commerce clause, courts have decided to let states do what they want, more or less, unless a specific federal law "preempts" the state one.

hawleyal 12y ago

This is old. The guy did an AMA a while back. http://www.reddit.com/r/IAmA/comments/1ygcil/as_requested_im_ben_lawsky_superintendent_of_the http://www.reddit.com/r/IAmA/comments/1ygcil/as_requested_im...

natrius 12y ago
This is not old. The proposed regulations were released today.

dmix 12y ago

Here is a Reddit comment breaking down the proposal: http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nydfs_here_are_the/cizyqyz http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_b...

mrfusion 12y ago
This line saddened me, "In fact, Satoshi would have commited a crime creating Bitcoin without registration. (200.2n5)"
- bobbygoodlatte 12y ago
  Well, Orville Wright didn't have a pilot's license :)
broolstoryco 12y ago
Here is a better thread http://www.reddit.com/r/BitcoinMarkets/comments/2ayenj/press_release_ny_dfs_releases_proposed_bitlicense/ http://www.reddit.com/r/BitcoinMarkets/comments/2ayenj/press...

mrfusion 12y ago

What happens if the entities aren't based in NY?

wmf 12y ago
If they have any customers in NY they need to follow NY laws. This is one of the problems with money transfer laws in the US.
- _archon_ 12y ago
  This is an interesting question and answer. I personally believe that legislation will be forced to change so that de jure can more closely resemble de facto... But this will not happen (anytime soon) while NY lawmakers think they can tax or regulate something.
- deleted 12y ago
  [deleted]

innguest 12y ago

This is absolutely ridiculous. That some part of "The Government" thinks they can regulate something that is not theirs is laughable. They've done (and continue to do) enough harm regulating their fiat currency. Who gives them the right, and more importantly, how can they be so delusional to think they can actually regulate something that is built in such a way as to be regulation-proof? Where's the torrent regulation PDF? These folks are clowns.

wmf 12y ago
It sounds like you're saying that if I create something I can simply declare it to be exempt from any laws I don't like. The whole point of laws is that they're not voluntary. As for torrents, there is that thing called copyright law.
- innguest 12y ago
  Yes, and how has copyright law been faring on the face of torrents? What I'm saying is that it's silly to try and regulate things that are mathematically designed to withstand any regulation. I do not believe unenforceable laws are the way to go. If the government prefers that we do things differently then it should lead by example, convince by arguments, etc, just like anyone else. Instead they're acting childishly by passing laws that regulate something they don't even understand, and that ultimately are not amenable to regulation.
  - wmf 12y ago
    it's silly to try and regulate things that are mathematically designed to withstand any regulation So basically a might-makes-right war of all against all. Gotcha. That concept isn't in much favor these days.
  - _delirium 12y ago
    Bitcoin is not "mathematically designed" to withstand regulation. The mathematical aspect of the system involves only its technical operation; it's designed to avoid certain classes of technical attacks on the system. If anything, it's more amenable to certain types of regulation than cash is—paying someone in cash doesn't make an entry in a public blockchain.

vinalia 12y ago

I understand the state's fear after the Mt. Gox fallout but their effort seems too overreaching. How could they possibly enforce _all_ citizens and businesses involved in cryptocurrencies to have licenses, hold 10 years of records, etc.? OTOH, would there be a way to hold currency exchanges legally accountable without breaking cryptocurrencies? There are too many stupid exchanges that scam peoples' coins and this seems like a barrier to adoption for lots of people. It would be nice to just push $100 from a bank account into a bitcoin account (like paypal does).

wcummings 12y ago
> It would be nice to just push $100 from a bank account into a bitcoin account (like paypal does). Literally coinbase
- wmf 12y ago
  Which may become literally illegal under these new regulations.

olalonde 12y ago

> Retained earnings and profits of in invested in US dollars. They may not keep any profit in Bitcoin. (200.8b) Bitcoin businesses cannot keep profits in Bitcoin? This is just too ridiculous to be true...

paulrr 12y ago

Matt Levine has excellent commentary on this: http://www.bloombergview.com/articles/2014-07-17/bitcoin-banking-will-be-boring http://www.bloombergview.com/articles/2014-07-17/bitcoin-ban...

blazespin 12y ago

Ben Lawsky posts on Reddit: http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nydfs_here_are_the/ http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_b...

tjaerv 12y ago

Erik Voorhees's response, at length: http://moneyandstate.com/reflections-right-privacy-response-nydfs-bitcoin-proposal/ http://moneyandstate.com/reflections-right-privacy-response-...

zaroth 12y ago

Wow, this is down in the weeds. E.g. (4) include procedures for the maintenance of back-up facilities, systems, and infrastructure as well as alternative staffing and other resources to enable the timely recovery of data and documentation and to resume operations as soon as reasonably possible following a disruption to normal business activities; ... (3) Source code reviews. Each Licensee shall have an independent, qualified third party conduct a source code review of any internally developed proprietary software used in the Licensee’s business operations, at least annually. A lot of these regs may have started out as Best Practices, but shouldn't regulations focus on the What, not the How? Also, the right place for these regs, if we must have them, are under FinCEN at the Federal level. If you watch some of their presentations, some smart people working there whom I'm sure would love to tackle this in a way that doesn't create an quagmire of conflicting and overlapping state regs. A little passage in some old document about interstate commerce comes to mind. The great thing about Bitcoin is this only applies to 3rd party companies wanting to assist you in transferring bitcoin, it doesn't apply at all to individual transfers between private entities. So this will do a lot to encourage private wallet software over centralized points of failure and intelligence gathering. For that, at least, you can thank NY.

deleted 12y ago

[deleted]

fiatjaf 12y ago

If you thing the State will ever do the right thing then you're wrong.

random8799 12y ago

Desperation... haha, Bless their hearts for trying. 18th century paper proclamations/thinking only go so far as technology progresses...