California Assembly Moves Forward With Idiotic Plan To Make All Bitcoin Startups Apply For A License
from the this-won't-end-well dept
Back in March, we wrote about a really bad bill that had been proposed in California by Assemblymember Matt Dababneh, called AB 1326. As we noted, it would basically destroy the ability of new startups in the Bitcoin space to build their businesses in California. Specifically, it would require any startup in the broadly defined "business of virtual currency" to first need to get licensed by "the Commissioner of Business Oversight" and then comply with a long list of other regulations -- including regular audits by the Department of Business Oversight. Well, unless you're a big bank or financial institution. Then you can carry on and experiment with Bitcoin all you want.In short, the bill would reverse decades of how Silicon Valley has lead the world in innovation -- by switching from a world of rapid innovation and permissionless innovation, to one in which any startup even contemplating doing anything with Bitcoin would have to go plead their case to clueless regulators in Sacramento. It's hard to see how anyone could possibly think this is a good idea for innovation or the California economy. And yet... the assembly's committee on banking and finance has now voted the bill out of committee, sending it on to the appropriations committee and then on to the floor of the legislature.
Of course, perhaps it's not so surprising that the committee on "banking and finance" would approve this bill -- considering it gives a free pass to big banks and financial services companies while hindering startups, entrepreneurs and innovators. However, any of the many startups in California that are doing some amazing and interesting things with Bitcoin should speak up now, because California is about to tell them to move out of the state entirely.
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Filed Under: ab1326, bitcoin, california, california assembly, innovation, matt dababneh, permission, regulations, virtual currency
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The underlying blockchain technology solves some interesting problems and might (maybe?) become something useful in the future. But trying to use it as a currency/investment/whatever-they're-saying-Bitcoin-is-now belongs in the "this won't end well dept" much moreso than attempting to discourage businesses from getting caught up in it!
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Do you know what has a much longer and larger history of fraud and scams? Dollar bills. Do you wish those to come to end also?
Blaming a currency for how it is used doesn't really make much sense to me.
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Why the negativism
So people will toss out reasons why bitcoin is bad to keep other people away from it, and prevent it become mainstream.
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"This will just be used by criminals to buy drugs!"
As if cash doesn't get used by the same people for the same nefarious reasons.
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Re: Mason Wheeler's comment
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No not really. You know why nobody created cheaper Western Union? That's because all this "money stuff" is regulated.
Bitcoin is not (yet) regulated, and thus - lot of fraud.
Anyway, your use case "send $100 to Africa" is not very common. More common case of "buy stuff for $100 in China" is solved pretty well by Paypal and its friends.
Expect bitcoin (in present form) to disappear as any fraud form before it.
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Things like Paypal and credit cards work pretty well in developed countries, although they're quite expensive even there and we frequently hear about Paypal cutting people off for no good reason. But in some countries and some businesses (e.g. pornography) they're notoriously difficult to work with and have much higher fees.
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Re: Startups
Most start-ups don't end well. It is only by trying and often failing, learning from the failures, and trying again, that successful businesses and technology grow. How many operating systems and office suites went by the wayside before Windows/MS Office won out? How many online shopping sites faded away until Amazon was the clear winner?
Bitcoin itself isn't a fraud or a scam. It's merely a distributed accounting ledger with a protocol and scripting language to update it. You can certainly build frauds and scams on top of it, but you can do that on top of Excel spreadsheets too. You are blaming the crowbar for what the thief does with it.
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If Bitcoin's technology didn't allow currency speculation, it would be as dead as the original Chaumian cryptocurrencies. We certainly wouldn't have people building Bitcoin ASICs, so it would be much more vulnerable to CPU/GPU mining botnets and other attacks. Probably nobody but hardcore cypherpunks would be using it (cf. Mixminion).
"We" certainly shouldn't be investing in Bitcoin. Buy a little when you need to make a purchase, and sell some when you accumulate too much, and you'll be able to take advantage of its useful properties (e.g., sending any amount to anyone for about 1 cent, even if the recipient is in a "bad" country or is doing something credit card companies don't like). Let someone else take most of the speculation risk—but I think someone does have to.
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'Committee member' then accidentally sells the startups entire business plan to Apple.
This entire rule was written by (and for) Apple, as they have well-placed spies ready to (illegally) give them all the startup info they could want so they can crush competitors earlier than they are currently.
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