We strongly believe in the power of open source software, and have seen first hand how it can empower communities to build better software for an endless variety of applications, from the ground up.
Bitcoin, and other digital currencies, are great examples of how open, community driven development can spark innovations that would be very difficult to replicate under a top down, proprietary development model.
That’s one of the main reasons why we accepted bitcoin as payment for Automattic upgrades. Though we paused Bitcoin support earlier this year, due to resource constraints, we still strongly support its mission. It’s also why we’ve recently engaged in the policy realm to champion policies that will foster, not impede future innovations in open, digital currencies like Bitcoin.
We’re proud to have filed comments in response to New York State’s proposed Bitlicense, which is a state-level attempt to regulate the decentralized, open source technology with highly prescriptive cybersecurity and licensing requirements. We’d also emphasize that many of these comments also apply to similar efforts to regulate digital currencies currently underway in other states, such as California’s AB 1326.
Bitcoin Should be (Un)regulated Like Open Source Software—Not Burdened By Misguided Licenses
We view the New York regulator’s efforts as deeply misguided. They needlessly stifle development of very promising open technologies, and potentially threaten free speech, privacy, and security.
Key reasons we oppose the proposed rules include:
- Regulation of any kind at this stage of Bitcoin’s development is a mistake. Adding burdensome regulatory requirements that do more harm than good will surely succeed only in stifiling new innovations in Bitcoin and blockchain technologies.
- Regulating digital currencies will have unintended consequences on free speech, especially anonymous speech online. Many of our users, especially those residing in countries lacking freedom of expression, choose to publish their sites anonymously. New York’s BitLicense proposal would require these publishers to risk revealing their identities for even small payments.
- States should not be in the business of regulating digital currencies. New York’s proposed law is bad enough, but imagine a world in which every state had its own version of the bitlicense – we’d have an unmanageable thicket of dozens of state laws. This situation would be ill-suited to a technology without borders. If digital currencies are to be regulated, it should be at the federal, not state, level.
- The cybersecurity provisions create more problems than they solve. These provisions would entrust the New York agency with so much data that the agency would become a top cybsersecurity target, and we are not sure the agency has the expertise to protect that data.
We are scarcely at the dawn of understanding the possibilities of open technologies like Bitcoin, and the blockchain. It is hasty to regulate digital currencies in the manner the BitLicense proposes, especially when we are not fully aware of what’s at stake. We believe that current laws, applied well, likely will address the consumer harms that New York is concerned about. Once the technologies have matured, it may be sensible to adopt a uniform, reasonable set of rules at the federal level.
Read our full letter to New York’s Department of Financial Services: