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New York currently has a system that regulates cryptocurrency. In 2015, the Department of Financial Services issued the regulations and one of these regulations imposed cryptocurrency companies to obtain a "BitLicense" to operate. Ben Lawsky, the superintendent of New York's financial services at the time, declared,
"We want to promote and support companies that use new and emerging technologies to create better financial companies".
The cryptocurrency community has not openly accepted the new regulations, finding them threatening, exaggerated and expensive to respect. In a draft of rule, there were over 4,000 comments. Once the rules come into force, many cryptocurrency-related entities have left the state and the whole occurrence has been dubbed "The Great Bitcoin Exodus. "Since then, the cryptocurrency ecosystem in New York has changed dramatically.
Three years later, many exchanges of cryptocurrencies have not returned, but there have been other companies that are still established. For example, R3, a consortium of executives in the financial sector with over $ 100 million in funding, remained in New York. Other blockchain startups focused on finance are also based in the state, including Symbiont, Axoni, JPMorgan, and Digital Asset Holdings.
Financial startups are not the only companies in the state. For example, the financial services company Consensys, which focuses on developing venture based on the Ethereum technology, is in the state and employs 400 people. Another company is Bockstock, a startup that is interested in developing a "new decentralized app Internet" based on the blockchain system. Another prominent company is BitLicense.
Although there are some regulations in place, regulators face several problems. regulators those who think to add new rules can make innovation decline and push the current companies in New York to look elsewhere. On the other hand, if they wait to issue regulations, then the final consumer may be damaged.
As a result, their actions must be strategic and based on a risk assessment. Regulations should act where there is the greatest risk and must also provide companies with advance notice regulations that could be released so that companies can prepare.
A model that regulators may want to consider following when it comes to issuing regulations is that of the FCC. In the early '90s, there was a transition from traditional telephone services to VOIP systems. The FCC received a petition that it wanted to ban
"The provision of … telecommunication services via" Internet "from non-tariffed and non-certified entities."
This is a similar challenge that the state faced in 2013 concerned Bitcoin. When it comes to VOIP systems, they were not regulated by prices, service contributions, emergency services and consumer protections – regulations on which traditional telephone entities were bound.
The FCC has been able to fight the right medium in issuing regulations that have not put an end to regulation, but which has also required compliance with VOIP services. This type of model can work well in the sphere of cryptocurrency and blockchain.
Where to draw the line?
The last problem that arises here is where to draw the line. There are many who exploit blockchain technology for criminal and terrorist purposes, making technology extremely threatening. These challenges are not new or exclusive of cryptocurrencies: they tend to arise with every new technology.
Despite what many think, the creator of cryptocurrency has not developed a technology without trust. Systems are based on expensive trust relationships and even transactions are reliable.
Furthermore, market capitalization is based on the collective belief of the independent network participants. With the right strategic application mechanisms, regulators can protect the public, without stifling those who see a bright and strong future for technology and all that it can do.
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