LocalBitcoins leaves New York over BitLicenses bill

     Currently, Bitcoin regulation in New York State remains a controversial topic, and LocalBitcoins has also ceased its services in the state.

     The world’s largest peer-to-peer bitcoin marketplace has been hamstrung by the BitLicense regulations introduced in early 2015.

     Whether people love or hate Bitcoin regulation, the BitLicense is definitely a prime example of something that should not exist.

     The hashing regulations, coupled with high licensing fees and intrusion on customer privacy, are not a good fit for most Bitcoin companies.

     But given that there are only two options now: either apply for a BitLicense or stop serving in New York, most companies prefer the latter.

     It’s an open secret that BitLicense regulations scrutinize bitcoin companies in an unequal manner, largely because the digital currency has a shady past involving shady market trading and money laundering.

     But then again, Bitcoin is also one of the most transparent forms of transferring money and should not be treated differently than traditional methods like fiat currencies.

     LocalBitcoins is just one of a growing number of bitcoin companies that have ceased all services in New York State.

     According to a blog post on the LocalBitcoins website, under the BitLicense, it is illegal to sell virtual currencies to New York residents without obtaining a specific license.

     LocalBitcoins' entire business is based on transactions between Bitcoin buyers and sellers in the industry connected by a peer-to-peer network.

     The main problem with LocalBitcoins and BitLicense is that every seller on their platform must apply for a license before trading.

     They would have to do this if they wanted to sell bitcoin to New York state residents, but there aren’t many LocalBitcoins sellers active in this part of the country.

     Getting a BitLicense is difficult enough for large companies, such as bitcoin exchanges and other financial services providers.

     So, in most cases, individual Bitcoin sellers do not have the funds required to apply for a BitLicense, let alone go through a long and rigorous application process.

     All these unfortunate experiences call for proper Bitcoin regulation .

     In the past week, other major bitcoin firms such as Kraken and BitFinex have withdrawn services from the region due to regulatory requirements of the BitLicense.

     In stark contrast, the Bitcoin trading platform Bitstamp has officially announced that it will apply for a BitLicense.

This unfortunate incident in the Bitcoin space has caused some Bitcoin enthusiasts in the New York area to worry that the BitLicense will hurt the growth of Bitcoin.

     As more and more major businesses stop providing services, it will become increasingly difficult for most Bitcoin exchanges to buy and sell Bitcoin in New York State. Ultimately, this could result in a lack of Bitcoin sales in New York State.

     BitLicense has once again caused huge controversy, and calls for proper regulation of Bitcoin have never stopped.

     Applying traditional financial regulations and norms to entirely new currencies and technologies, such as Bitcoin, is inadequate and can have detrimental effects. Bitcoin industry leaders and policymakers need to sit down and discuss countermeasures before more damage is done to the nascent Bitcoin economy.