Perianne Boring Speaks On FinTech Regulation and CDC Goals

The Chamber of Digital Commerce (CDC) celebrated its 1 year anniversary on July 19, 2015. Just in its first year, the Chamber has already played an enormous role in Bitcoin education and FinTech regulation. Its efforts to help shape the New York BitLicense framework are one of its greatest contributions this year.

Also Read: Chamber of Digital Commerce and DCC Partner to Promote Digital Currencies

The Digital Chamber is truly on the forefront of the Bitcoin industry. the CDC is the first and only Washington, DC-based trade association representing the digital asset industry. We reached out to the Digital Chamber’s Founder and President, Perianne Boring to find out more on what they are doing and hear Perianne’s thoughts on FinTech regulation:

What are some objectives or activities the Digital Chamber is taking on at the moment?
Our mission is to promote the acceptance and use of digital assets and related technologies. Through education, advocacy, and working closely with policymakers, regulatory agencies and industry, our goal is to develop a pro-growth legal environment that fosters innovation, jobs and investment.

We are based in Washington, DC and focused on US federal regulation and legislation. However, we also engage with the states and in international efforts with our counterparts and members around the globe, where appropriate.

In our first year of operations, we have focused on educational efforts to lay the groundwork for our broader advocacy goals. We are working with and have identified numerous federal agencies and departments who are regulating, or will possibly regulate, digital currencies – there are at least 10 of these just in DC.

We are also looking to bring coordination between these various agencies and departments. Competing and contradictory rules and regulations could pose threats and unnecessary compliance costs for the industry.

In addition, we are working on bringing policymakers up to speed on the potential benefits of blockchain-based technologies – above and beyond currency applications — to enable us to have more sophisticated policy discussions, which bring us to our next phase of advocacy work.

Could you share the Digital Chamber’s goals for this next year?

Our goals for the next year include (1) continuing to influence policymaker’s perceptions of bitcoin/blockchain and legitimizing the industry; (2) increasing our Congressional educational efforts; and (3) bringing the various regulatory agencies and departments together to better coordinate each of their efforts.
Why are the startup costs for digital companies so exorbitant? (referring to Carol Van Cleef’s statements on Bizjournals)

I believe what Carol is referring to is obtaining money transmission licenses.

This is a state-by-state issue. Obtaining a license in one state does not give permission to operate in other states. In addition, it is a federal crime to be engaged in a state without a license if that state requires a license.

Which means, if you are in the business of money transmission, which exchanges clearly are, you must obtain a money transmission license (or exemption) in each state that you have customers in. It is so costly because each state has their own application process, with various requirements, including bonds. Companies have to apply with each state one-by-one. This is an extremely costly and burdensome process that takes potentially millions of dollars and years to accomplish.

In my opinion, this process is a huge barrier to entry and has currently proved to be impossible, as not one digital currency company has been successful in obtaining licenses (or exemptions) in all 50 states. This is a regulatory failure and is a huge contributor to several high profile scandals that have plagued the industry, including Mt. Gox and BitStamp. Both of these exchanges were not based or regulated in the US.

If the regulatory burden was not literally impossible to get through – we would have fully operational and regulated bitcoin exchanges in the US – regulated by US regulators – which would also add liquidity to the market and help with the volatility risks.

Are you happy with the outcome of the New York BitLicense? Is the new legislation going to hinder startups?

Because of the issue outlined above, this state-by-state process eliminates the possibility of start-ups. There is no “start-up” that can afford $2million+ in legal and licensing fees before even having the opportunity to go to market. The majority of start-ups raise under $1mil in their initial funding rounds. This is simply beyond their means.

What concerns you the most about the final legislation?

Given how rapidly the industry is evolving, some of the assumptions made today that went into the regulation may be very different one or two years from now. What is concerning is that DFS Superintendent Lawsky, who lead the BitLicense initiative, left the DFS just days after it was adopted into law. New leadership may not place a high priority on digital currency.

There needs to be some mechanism in place that ensures the DFS will come back and review the regulations to ensure that it appropriately reflects the state of the industry at the time of the review.

Is the lack of regulation hindering the United States from economic progress in the FinTech sector?

There is no lack of regulation. There is plenty of regulation. However, there is lack of regulatory clarity. Even in the BitLicense, there are still many questions about various business models in the ecosystem about who needs to apply for a license and who it doesn’t cover.

Images: 1, 2

What do you think about the Digital Chamber’s role in the Bitcoin community and its regulation? Share your thoughts below!