New York’s BitLicense was born into controversy.
Created by the New York State Department of Financial Services (NYDFS) to protect consumers from fraud and loss, critics of the industry-specific licensing regime weren’t exactly quiet.
Objections ranged from the potentially prohibitive cost of compliance for startups to the perception that bitcoin companies were being held to a higher standard than traditional financial institutions. Then, last June, the measure was finalized into law, rendering those concerns moot.
But, one man would not give up that fight.
Systems engineer Theo Chino has been refining his one-man battle against the BitLicense over a period of two years and two lawsuits, which culminated earlier this week with the submission of the latest round of documents so he could see his day in court.
The aspiring bitcoin entrepreneur tells CoinDesk his plans to launch a company to help bodegas accept the cryptocurrency were cut short by the regulation, and his time and investment lost.
While his suit is certainly personal, he views his fight in larger terms.
Chino told CoinDesk:
“If in New York, companies like mine are not allowed to operate, bitcoin is dead for the whole world.”
Filed in October 2015, the lawsuit alleges that the NYDFS overstepped its power by regulating bitcoin in two key ways.
Chino claims that, when the New York state legislature consolidated the Insurance Department and the Banking Department in 2011, the newly formed Department of Financial Services wasn’t granted authority to regulate cryptocurrency.
Chino explained that he sees a recent court case in Florida in which a judge ruled that “bitcoin isn’t money” as evidence to support his argument that the financial regulator overstepped its bounds by regulating the technology.
But his suit also alleges that even if the DFS did have the power to regulate cryptocurrency businesses, it did so in an “arbitrary and capricious” manner.
Specifically, the suit asserts that the requirements demanded of bitcoin companies exceed that of traditional financial institutions.
Chino’s lawyer, Pierre Ciric, explained his client’s position:
“When the NYDFS formulated its corpus of rules for cryptocurrencies, it created completely different, and in fact more stringent constraints and requirements, for the bitcoiners compared to other financial institutions. And our contention is that that’s not something that’s within the powers of the regulator.”
Taking on the Attorney General
At 9:30am on a crisp Halloween morning, Ciric submitted an affidavit to judge Lucy Billings to argue that the case should proceed in spite of an earlier motion that it be dismissed by New York Attorney General, Eric Schneiderman.
The sworn affidavit signed by Chino states that he founded two bitcoin-related companies prior to the promulgation of the BitLicense. One, Conglomerate Business Consultants (CBC) Inc, was a distributor of phone minutes to bodegas and provided the bitcoin processing service directly to the shops. The other, Chino Ltd, provided technical services to CBC by processing the bitcoin transactions.
Among multiple exhibits presented as evidence of Chino’s investment is what appears to be a signed contract for bitcoin processing services and informal surveys from bodega owners expressing interest in bitcoin.
The documents filed are the latest in a series in which Schneiderman requested that the lawsuit be dismissed on grounds that the NYDFS did not overstep its authority and that Chino did not have “standing” to sue because he didn’t have a sufficient stake in the industry.
Joining Schneiderman in his request to dismiss is the department’s general counsel for banking, Peter Dean, and the assistant attorney general, Anthony Tomari.
Currently, Chino awaits the judge’s decision to either move the case forward or dismiss it. If the case advances, Ciric said there can be no settlement, only an absolute winner and loser.
The lawyer expects that, in either case, there will be an appeal.
Article Source: http://www.coindesk.com