As a regular investor of cryptocurrencies, BitLicense won’t impact you directly, and therefore, doesn’t receive as much coverage as it should. Yet BitLicense is just another example in a series of bitcoin regulation protocols, and they should concern anyone who has even a fleeting interest in anything blockchain related.
So what’s the big deal about BitLicense? In short, this is a common term to describe the business license that’s required to conduct business activities that involve virtual currencies. This license is issued by the New York State Department of Financial Services (NYSDFS) and covers a broad range of transactions or services.
In a nutshell, BitLicense treats New York-based cryptocurrency businesses as brokerage firms.
That might not seem like a relevant topic for those simply interested in cryptocurrencies for solely their profitability potential. However, the BitLicense scam is a development that could unexpectedly rage into other, more onerous policies that would negatively impact a larger community group.
For starters, BitLicense could cease to become just a “New York thing” and expand into other states. I recently received a notification from a good friend that the U.S. District Court in San Diego will soon preside over a BitLicense-related case. A Meetup group has been established to gather support for crypto-related businesses and simultaneously stand against the government’s position.
Furthermore, the BitLicense scam is an underhanded way to coerce bitcoin regulation on businesses that don’t deserve such draconian treatment. By its very nature, bitcoin is a decentralized currency – it has no ownership, and therefore, it cannot be regulated in the traditional sense of the word. Despite this obvious problem, the government continues to push for tougher controls.
But more importantly, BitLicense goes beyond bitcoin, or even the blockchain technology itself. This is about stymieing innovation and human progress by imposing centralized access to these innovations; that is, the government doesn’t necessarily care about cryptocurrencies. What they want is their cut, their piece of the pie.
Uncle Sam knows it can’t accomplish this through the decentralized blockchain itself. The only practical way of accomplishing their dirty deed is to restrict access to the blockchain. In this way, they can claim openness to technology and progress, while profiting from it by imposing what essentially amounts to a cover charge.
Indeed, if the BitLicense movement takes off, every state would require businesses actively buying and trading cryptocurrencies to register as a crypto brokerage. From there, investors may have to register as “crypto traders,” which would help the IRS in its witch-hunt.
So while this scam is concentrated to a specific subgroup, don’t be surprised if it starts flexing its muscle.