BitLicense: Bitcoin developers and miners not affected

Benjamin Lawskydevelopers, miners and individuals will generally not be affected by the upcoming BitLicense in New York, according to Benjamin Lawsky, head of the New York Department of Financial Affairs (NYDFS).

In a speech at the Benjamin N Cardozo School of Law in New York, Lawsky clarified that many individuals and companies operating in the state of New York in the Bitcoin world do not require regulatory approval or a „BitLicense“ (Bitcoin license).

We regulate the Bitcoin secret, Lawsky said

„To be clear, we do not aim to regulate software, scam or software development. For example, if a software developer develops a wallet and makes it available to people for private use, no Bitcoin secret is required. Those who are innovative and develop new platforms for digital currencies will not need BitLicense.“

However, Lawsky pointed out that companies or people who manage customers‘ money will not be exempt from it: „We will not allow someone in their garage to run a bank.“

We don’t regulate cryptosoft development

Banks and technologies collide as seen in the review about cryptosoft. Lawsky believes that the banking sector and the technology industry are slowly „colliding“, posing new regulatory cryptosoft challenges.

The NYDFS worked out the regulations for sending money when there was neither the Internet nor digital currencies. However, the department is still responsible for regulating such companies today.

A positive hint, by the way. Lawsky said that the NYDFS quickly realized the great potential of the blockchain: „When we started to take a closer look at Bitcoin, we could immediately see the power of the technology behind Bitcoin. The technology has the potential to drastically reduce remittance fees, Lawsky says.

New Yorkers usually pay 8-9% for overseas transfers, but with Bitcoin these fees could be reduced to just 1%, Lawsky stressed. In addition, with digital currencies no one has to disclose their credit card details and transactions take place within minutes, he added.

Lawsky explains the provisions
After the fall of the Bitcoin exchange Mt. Gox, the NYDFS has started to develop the first draft of the BitLicense.

The comment period for the original draft was extended at the request of leading members of the Bitcoin industry. The comments have been taken into account in the revised version. There will be another comment period after the release of the new version.

Lawsky also made it clear that the NYDFS will never require companies to provide more than one digital currency license, and in most cases no money sender license will be required. Just like the developers, no individuals will be affected by the BitLicense.

Lawsky also addressed some of the criticisms of the first draft and said that it was clearly some misunderstanding. One point of criticism was, for example, that banks would not have to comply with the new regulatory framework, but that would only be the case if they did not work with digital currencies, Lawsky said.

Benefits of regulation
Lawsky also said something about the attitude towards Bitcoin mining:

„Mining will not be regulated per se. However, if a miner becomes active in other areas such as hosting wallets or on file-sharing sites, a BitLicense for these activities may become due. No license will be required for the mining itself.“

In order to allow new startups to flourish, the NYDFS will also try to keep compliance costs as low as possible.

In his speech, Lawsky also admitted that companies can decide for themselves whether to work with companies from unregulated countries to circumvent regulation. This, Lawsky said, would ultimately allow the company to sacrifice competitiveness.

The Silk Road: The Darknet as a Dark Parallel World?

Almost like a shadowy world, there is a dubious parallel universe next to the freely accessible World Wide Web: we are talking about Darknet, which has a reputation as a breeding ground for crime. But is using the „dark side of the Internet“ always illegal? How do the law enforcement authorities behave? The following text provides an overview. – Jenna Eatough

Definitions: From Darknet to Deep Web

From the illegal drug trade to human trafficking and contract killing: in Darknet, criminal machinations meet supply and demand. Despite the alleged causal connection created by the media that the Darknet can only be seen in connection with illegal files, the existence of this digital underworld is not illegal in itself. Large parts of the „regular Internet“ (also called „Clear Web“) can also be assigned to it – all pages that are not marked with a „crawler“ are technically to be defined as „belonging to the parallel world“. Pages that are not marked in this way therefore belong to the Darknet. In order to clearly differentiate from illegal content, the term „deep web“ is used in this context. Despite the plausibility of the assumption that pages can be found via search engines, certain options can hide them from regular users.

A crawler is a program that searches the web for web pages and marks all content that can be found there. This serves the corresponding findability by search engines. However, a single command on a page is enough to prevent the crawler from using the corresponding address.

Anonymity: Encrypted communication

The probably most essential attribute of the Darknet is that of anonymity, i.e. an encrypted communication. With the normal WWW the connections between computers and corresponding target websites are created fully automatically; in this way the respective data is exchanged. In many cases, the connections are subject to such encryption that only the sender and recipient can communicate in plain text; the provider cannot read along. Nevertheless, the parties involved in this connection are known, so that the perpetrators of crimes committed on the Clear Web can be held responsible (a hotly debated topic among data protectors). In Darknet, however, there is not only a connection between the Internet provider and the target. Therefore, a specific browser or a special browser setting is required at the beginning. Only in this way can the computer become part of a multi-layered network. The special browser takes over the cryptographic activities. It should be noted that the search engines of the Clear Web are unable to find the pages of the Darknet. The sometimes best-known search engine of the digital underground can be seen in Grams, a hidden service modelled on Google.

The searchability of the pages is associated with efforts anyway, as is the search for the operator. In the light of anonymisation and concealment of the respective origin, the Darknet can therefore be described as secure. However, this cannot be transferred to the areas of legal and data protection.

Pay anonymously: Legally permissible?
In the Clear Web, the following applies: anyone who conducts and pays for transactions online makes it possible to trace their person, because bank cards and the like can be clearly assigned. Crypto currencies provide a remedy here. The Bitcoin is regarded as the first digital means of payment that does not receive any state support – instead it embodies a decentralised payment system, completely detached from instructions from the banks. This also makes tracking much more difficult than is the case with conventional payment transactions. However, Bitcoin’s administration requires special software – a Bitcoin Wallet.

The euro is the unrestricted legal currency for the fulfilment of obligations on German soil. However, the legislator does not explicitly prohibit alternative currencies either: Instead, it should be sufficient for two persons to reach a consensual agreement on debt settlement by means of a freely selectable means of payment. Up to now, the various Bitcoin wallets, which were initially subject to serious discontinuities, have been noted by the banks rather amused. Today, however, Bitcoin is securing a solid position for itself within the world of means of payment. According to the Federal Office for Financial Services Supervision (BaFin), it is regarded as a unit of account and a financial instrument within the meaning of the German Banking Act. One could criticize one with it verbund