California Working To Create Bitcoin Licensing Requirements

One of bitcoin's biggest struggles has been a lack of regulation. Firms that use the cryptocurrency have found it difficult to appeal to the general public as the absence of government-backed regulations has made the currency appear dangerous and risky.

However, many argue that bitcoin's lack of regulation is a major part of its appeal, making it difficult for the industry to walk the fine line between making the currency safe and losing sight of its initial purpose.

Bitcoin License

In California, lawmakers have voted to advance a bill that will create a licensing process designed for bitcoin-based businesses. The bill requires bitcoin firms to file annual and quarterly financial reports for audit and allows the licensing commissioner to request special reports "from time to time." Under the new scheme, information detailing business operations together with financial statements will help determine whether or not a license should be issued or upheld.

Related Link: New Dictionary Entries Suggest Bitcoin Is Going Mainstream

Bill Faces Opposition

Critics of the law say that it will weigh on innovation within the bitcoin community. The Electronic Frontier Foundation and Copia Institute have been very vocal about their opposition to the new measures, saying that the industry is still too new for strict laws. They also claim that by creating state-wide laws, cryptocurrency use throughout the US will become confusing and the differing laws will prevent adoption rather than encourage it.

The Best Step Forward

However, supporters argue that the industry should embrace efforts to create specialized laws that cater to the cryptocurrency industry. While the laws may create obstacles for bitcoin firms, they say that without them cryptocurrencies are likely to be governed by existing financial regulations that have been designed for traditional finance companies, something that could stifle growth within the industry to a much higher degree.