Privacy, Economic and Free Speech Flaws in Proposed Bitcoin Regulatory Scheme
San Francisco – The Electronic Frontier Foundation (EFF), along with reddit and the Internet Archive, today filed formal comments with the New York State Department of Financial Services opposing the state’s proposed regulations for digital currencies such as Bitcoin. In the letter, EFF argues that on top of damaging privacy and harming innovation, New York’s “BitLicense” regulatory scheme also risks infringing on First Amendment rights to freedom of expression and association.
The State of New York is currently considering BitLicense, a sprawling regulatory framework that would mandate licenses for a wide range of companies in the digital currency space. The regulations would force applicants to submit significant personal information to the state, including fingerprints and head-shot photographs. The policy would also require these companies to maintain detailed records about all transactions for 10 years, including identity data of users.
“Digital currencies such as Bitcoin strengthen privacy and are resistant to censorship,” EFF Activism Director Rainey Reitman said. “We should consider this a feature, not a bug; it’s an innovative way of importing some of the civil liberties protections we already enjoy offline into the digital world.”
EFF notes that digital currency protocols are used for more than just payments—they have expressive and associational uses, too. Bitcoin-like systems are used for organizing and engaging with groups or communities. In addition, Bitcoin block chains frequently contain political speech, such as famous quotes and portraits of prominent historical figures. As currently written, EFF argues, the BitLicense regulations place an unacceptable burden on free speech and association.
“The courts have long recognized that code is speech protected by the First Amendment,” EFF Special Counsel Marcia Hofmann said. “At their core, digital currency protocols are code. Attempts to regulate code must include robust protections to ensure constitutionally protected speech is not stifled, and the BitLicense proposal would undermine those First Amendment principles.”
On Oct. 15, EFF launched an online activism campaign encouraging Internet users to oppose the BitLicense proposal by submitting comments to the New York State Department of Financial Services.
For the text of EFF’s comments:
For EFF’s activism campaign:
Electronic Frontier Foundation