Xapo: "The BitLicense is over-regulation"

Xapo founder Wences Casares has weighed in on the “BitLicense” regulatory framework proposed by the New York Department of Financial Services (NYDFS), calling it “over-regulation” that “hinders progress and serves an anticompetitive function” for the still-growing bitcoin industry. In a new post on the Xapo blog, Casares said that the regulation will have a “potentially counterintuitive effect” and will prevent bitcoin’s leading companies — “those with professional management teams dedicated to security and compliance” — from operating in New York.

“Regulation is a good thing in the correct dosage and at the right time,” Casares wrote, but later added that “… we still don’t believe the time is ripe for the BitLicense. We are in the very early stages of bitcoin’s history and believe an extended period of time for discovery and innovation in the space is necessary before regulations specific to bitcoin are even proposed for adoption. … In the interim, we believe the existing regulatory landscape, such as regulations applicable to money transmitters, are sufficient for purposes of consumer protection.”

Casares also praised the NYDFS’s “thoughtful leadership” on digital currency regulation, noting the agency’s relatively open approach and seeming lack of hostility to the new financial system. But he also urged the agency to “carefully consider the concerns of the broader bitcoin community” and adopt a “more orderly timeline” for the BitLicense adoption.

The timing of the Xapo announcement is interesting, coming well after the initial public comment period ended. Last month, the NYDFS opted to extend the public comment period from 45 to 90 days, although most major players in the bitcoin space had already weighed in with their views long before the initial deadline.