Digital Rights Advocacy Group Launches Campaign Against BitLicense

Digital rights advocacy group the Electronic Frontier Foundation (EFF) is supporting privacy, free speech and innovation through a new email campaign opposing New York’s proposed BitLicense.

The EFF has crafted a pre-written letter for supporters to sign and send to the New York Department of Financial Services (NYDFS) and its leading supervisor, Superintendent Ben Lawsky. The letter argues that premature regulation stifles innovation, and that because of this, the BitLicense could adversely affect the bitcoin and digital currency industry should it pass in current form.

However, the EFF mostly asserts the consequences the passage of the law could have for society at large – not just bitcoin businesses and users.

In a post to the EFF blog yesterday, activism director Rainey Reitman expounded on the ways the BitLicense affects everyone’s financial privacy, writing:

“The NYDFS is letting the fear of money laundering drive a massive regulatory proposal forward that would affect users who are doing nothing wrong. NYDFS should respect the privacy of technology users, and limit its regulation to what is proportionate to the real threat at hand.”

The EFF is a non-profit civil liberties organisation that works on technology issues and began following bitcoin in 2011 because of its potential as a cash-like solution for digital payments.

Regulation bigger than bitcoin

Speaking to CoinDesk, Reitman emphasized the larger implications of the BitLicense, arguing that, regardless of any regulatory body’s view on bitcoin, the BitLicense is problematic because it could be applied more widely to other innovations.

“We really don’t know what tools will be built on the bitcoin protocol for years to come, and the proposal that the NYDFS has put forward doesn’t have any carve-outs for non-financial services that are using the bitcoin protocol,” Reitman said.

Reitman wrote that people affected by the BitLicense proposal fall into two groups: those who will require a BitLicense and those who don’t but may still be affected by it.

Although the law wouldn’t affect digital currency users specifically, it would mandate affected companies keep 10-year records on all parties in each transaction, including the amount, date and time of the transactions as well as the total amount feed and charged to or on behalf of the licensee.

Reitman argues that digital currencies like bitcoin endeavor to “recreate some of the censorship-resistant and privacy-protecting attributes of cash”. However, the records each licensee will be required to keep would also include such personal data and identity information as the full names of the transaction parties, account numbers and physical addresses.

“This would, in effect, threaten the possibility of having any cash-like interactions in the digital world,” she said.

Exemptions not guaranteed

In the interview, Reitman also cautioned that certain groups within the bitcoin community should not be so confident that they might be exempt from the regulation, citing Superintendent Lawsky’s most recent remarks from Tuesday.

At the time, Lawsky expanded on the intent behind the BitLicense law, asserting that he would ensure bitcoin miners and software developers would be unaffected by the BitLicense in the next draft of the regulation.

Still, Reitman warned that members of the bitcoin community should not be “lulled” by his statements.

“We don’t know what’s in the next draft of the regulation until we read the next draft of the regulation,” Reitman said. “What’s important is what ends up in the final versions and right now there are no good protections for software developers or frankly for miners. I think there’s enough wiggle room in the current version that miners should be concerned.”

Public show of support

Bitcoin Foundation chief scientist Gavin Andresen took to Twitter today to promote the letter campaign in one sign that the EFF’s initiative has had a larger impact on the digital currency community.

The new BitLicense would force Bitcoin services to spy on their customers. Help stop it: https://t.co/2Ah70xXZNE via @eff

— Gavin Andresen (@gavinandresen) October 16, 2014

Andresen has a history collaborating with EFF. The organisation began accepting bitcoin in January 2011, later suspended that option and reintroduced bitcoin payments in May 2013.

The EFF spent some time analyzing bitcoin during its break from the technology. In that time, it returned all the bitcoin it had previously received to the bitcoin community through Andresen.

Broad criticism for BitLicense

The EFF initiative is also the latest sign that the BitLicense proposal has garnered criticism beyond the bitcoin and digital currency community.

In its formal remarks, the EFF cited a similar stance voiced by the Center for Democracy & Technology (CDT), which spoke out against the proposal this September. The non-profit, which seeks to maintain the user-controlled nature of the Internet, wrote at the time that the BitLicense threatens broader online privacy and innovation.

With their statements, the EFF and the CDT join a chorus of bitcoin companies that have issued public statements opposing the law, including Coinbase, Circle and Xapo.

Images via EFF