The recent BitLicense carve-outs for software developers and bitcoin miners seem to allow for a level of innovation free from regulation. So far, so good. At a glance, the New York Department of Financial Services seems to be on the right track. Providing a regulatory framework in which bitcoin exchanges, online wallets and merchant processing services can operate is an important step forward in the evolution of virtual currencies and legitimizes their use.
However, when one digs deeper into the NFS BitLicense proposal, what we actually see is a regulatory framework that imposes unrealistic requirements on bitcoin users and merchants.
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