A new revision (pdf) of the New York BitLicense was released this week. Yesterday CoinDesk reached out to several people in the industry to see what their view was on the new copy. I have a small quote in the subsequent article: “BitLicense Revision Leaves Room for Continued Debate”
Below are my unabbreviated thoughts (I would like to thank Ryan Straus for being able to discuss in-depth some of these issues the past week as well):
It is still unclear to me whether the BitLicense is establishing a facilitator regime (like money transmission or custody) or an intermediary regime (like deposit taking). Does the BitLicense permit the acceptance of deposits by licensees? If not, then the question remains whether organizations like NYDFS and DOJ considers hosted wallet services to constitute deposit taking. If so, BitLicensees would presumably not be able to avail themselves to the securities exemption that is available to banks and other deposit takers. A deposit is a debt owed by the depository to the customer (depositor). Does holding oneself out as a depository qualify as a securities offering? If so, would licensees qualify for the bank exemption to the securities laws?
Obviously I’ll let the lawyers hash this out, but so far the interpretations of what “software” is or is not still seems vague especially since it is still not clear if these firms will be classified as a “custodial regime” as custody denotes possession and bitcoins arguably cannot be possessed in any sense (e.g., is Blockstream acting as a custodian for building and providing a service that enables federated pegs; are the servers that participate as the federated nodes liable?).