Last updated on July 20th, 2014 at 03:00 am
With all of the recent discussion about the proposed NYFDS regulations we’ve seen discussions around how it impacts exchanges, tipping programs, and more but one area that has been overlooked in part is mining pools.
BTC Guild however is apparently thinking of the potential impact it will have on the mining pool after posting a notice on the website that reads:
This news update is being made to remind all users that BTC Guild is not a bank. Leaving BTC anywhere that is not your own wallet is always a risk that is outside of your control. Automatic withdrawals should always be set to trigger at least once a week, if not more frequently for large users, limiting your exposure.
The above is also important as news comes out of the New York Department of Financial Services, with proposed regulations which are extremely broad. Under the current proposals (subject to public comment and revision), operating a pool within the US will be impossible to do legally without obtaining significant personal information on ALL users, not just those in the US. There would also be significant financial costs which would exceed the amount of money the pool has generated since inception. Since there is no way anybody will mine on a pool with those requirements, it means that any pool in the US will be forced to shut down, or operate illegally and hope they’re ignored.
If the regulations are finalized (this is unlikely to happen for at least 3-4 months if not more) in a form that still applies to pools, the pool will be forced to shutdown. This news post is being made as notice that this is an exception to the stated 3-month closure window identified in our FAQ and the forum thread. If the regulations pass, the 3-month window will be reduced to 45 days due to legal requirement to cease operations prior to the regulations taking effect.
This warning is pre-emptive. Nothing has changed as of this news post, and I am still waiting on feedback from legal counsel regarding whether or not it is possible for New York to extend its reach into another state if the pool has users in it from New York.
As it stands BTC Guild isn’t shutting down but they are thinking in a very forward manner by speaking with legal counsel about how these regulations could impact the mining pool and other mining pools.
Some have argued that the current theories are alarmist regarding regulation while others would state that the regulations are not clear in many regards and until they are clarified further that caution should be exercised and the assumption should be worst case scenario especially when left intentionally or unintentionally vague stances from regulators.
While BTC Guild reports it is unsure if while it does not operate in New York if the regulations would apply to the pool the rules have been quite clear in that regards. The regulations read:
(n) Virtual Currency Business Activity means the conduct of any one of the following types of activities involving New York or a New York Resident:
Most attorneys seem to agree that if you deal with New York residents in any way shape or form regardless of what state you are in the rules equally apply to your business. If something is typically spelled out in a law specifically than it is typically exactly as it is read.
With that said it is a simple fact that regulation is coming. We have reached a point where it will be impossible to prevent regulation.
What the impact of regulations will be on cryptocurrency has yet to be seen but it should serve as a reminder how important it is now for your voice to be heard as the comment period begins.
How BTC Guild and others react to this set of regulations has yet to be determined but it is apparent that everyone is thinking about it and preparing to batten down the hatches.