Bitcoin entrepreneur and software developer Theo Chino, has accused the New York Department of Financial Services of using Bitcoiners in New York as guinea pigs.
The New York businessman has filed a petition at the Supreme Court of New York, challenging the mandate of the New York Department of Financial Services.
Process burdensome and expensive
In his claim, filed by the Ciric Law Firm PLLC, Theo alleged that the New York Department of Financial Services acted illegally and arbitrarily, and exceeded its regulatory power when it promulgated its controversial “Virtual Currency” regulation in 2015 - Part 200 of Chapter 1 of Title 23 of the New York Codes, Rules and Regulations.
When Cointelegraph spoke to Theo, he accused the Department of acting against the spirit of the legal system. He explained how the Department’s regulation is legally unwarranted:
“It is appalling that the former head of the Department admitted that his ultimate goal was to use the Bitcoin community as “guinea pigs” to test new rules for the banks, which the legislature never authorized. Article 78 of the State of New York clearly stipulates that any regulation in New York must precede by a law enacted by the Legislature.”
Making Livelihoods Illegal
The regulation, popularly known as Bitlicense, has put many small businesses into financial ruin. Reuters in October, quoted GoCoin CEO Steve Beauregard as saying that securing a New York license was not worth the effort: "It's too overreaching and burdensome, especially for the smaller companies."
“Because of this regulation, I am no longer able to pursue the expansion of my business, which I have to close as a consequence. This is why I am seeking the help of the judiciary branch, to tell these regulators they cannot play around with people’s lives and investments, and to stop them from using us as their toys,” explained Chino.
Apparently, the Department’s regulatory burden is what we call, in economic freedom activism, as “making livelihoods illegal” by bureaucrats in their so-called bid to protect the consumer. The unintended consequence is the destruction of small businesses involved in Bitcoin.
Other States Gain
Theo further elaborated on how the regulation has forced small businesses out of New York. He alleged that many businesses of that kind have left for states like California where the ground rules are favorable. “The regulation stifles innovation and startups leading to many small businesses leaving the area, but it’s hard to know the exact number,” Theo related forlornly.
Bitlicense Application Procedure
It costs a whopping $5,000 to file an application for a Bitlicense, running up to 500 pages of laid down procedures. Then there is scrutiny of business owner’s personal information as well as business plans and strategies. Some business owners are convinced that such a process exposes them to hackers.
“It is a very expensive process, and there is nothing fair in the regulation imposed by the NYFSD,” Theo, whom from all indications is a brave man, echoed.
Oddly the Bitcoin entrepreneur’s petition at the Supreme Court has not received the support and endorsement of the Bitcoin Foundation. In his judgement, Theo thinks the foundation has a different agenda:
“I believe it’s a political issue. The Bitcoin Foundation and other associations are young in the political process, and they believe that they should not upset the regulator to accomplish their purpose. Having gravitated in the New York political landscape for more than 10 years, I think they are mistaken.”
However, he is uncertain as to the consequences awaiting Bitcoin in New York, should the petition be thrown out. “It is hard to say. I do believe that it will be difficult for regular folks to get a chance to understand it,” he concluded.