New York vs Ohio Crypto Regulatory Frameworks, From Conservative to Progressive
For years, countries around the world have been struggling to deliver a proper regulatory framework for blockchain technology and digital currencies. The lack of centralized authority that would take command and responsibility is one of the main reasons why this has been so difficult for many, and the situation is especially confusing within the US.
The US is somewhat unique in terms of structure, as each state has its own laws and regulation. Because of that, the attitude towards these new technologies can go from entirely conservative, such as in New York, to very progressive, like in Ohio, for example.
Over a short span, these two states became representatives of two major regulatory standpoints. New York has always been strict, suspicious, and ready to bring forth blockchain and crypto-related controversies. Ohio, on the other hand, has been more encouraging of this technology, which has allowed greater acceptance of it.
New York is seen as a conservative location for several reasons. First and foremost, it is where Wall Street is located, which is the entire world's financial capital. Now, considering that cryptocurrencies — the largest blockchain application at the moment — aim to eliminate the need for financial institutions, and third parties in funds managing in general — it is not surprising that the Wall Street doesn't support this tech.
JPMorgan's chairman and CEO, Jamie Dimon, stated on several occasions that Bitcoin is a fraud, while the Bank of America itself openly views cryptocurrencies as a threat to their business.
Naturally, regulators understood this, and soon enough, New York implemented a regulatory framework named BitLicense. BitLicense has a goal of providing consumer protection for crypto and blockchain technology. ShapeShift exchange's CEO, Erik Voorhees, even criticized Jamie Dimon's statement regarding Bitcoin on Twitter.
My memory is failing, was it Bitcoin or was it JP Morgan that was bailed out by the government? https://t.co/DHqFzr5UJN
— Erik Voorhees (@ErikVoorhees) September 12, 2017
In the end, BitLicense was responsible in crypto exchanges leaving New York in search of friendlier ecosystems. This also includes a popular exchange named Kraken, which heavily criticized the framework in a blog post from 2015.
What was so bad about BitLicense? The main reason for exchanges disapproval is the attempt to use the license in order to bring “consumer protection”, which would actually only enforce KYC rules. In other words, it would mean that customers' personal data would have to be collected, which goes against the entire point of crypto and blockchain.
As a result, BitLicense was only granted to twelve companies so far, which means that any new blockchain-based project would have a very hard time getting it at this point. Considering the amount of effort that it would take to obtain the license in the first place, many have decided that it is simply not worth it and that relocating is a much better decision.
Despite the fact that Cleveland, the second largest city in Ohio, is only two hours away from New York's border, the two couldn't be more different when it comes to their stance towards crypto.
For example, Ohio was the first state to accept tax payments in Bitcoin. While Arizona managed to achieve this as well, and Illinois and Georgia are attempting to do the same right now, Ohio is still the first one to make such a bold move.
Cleveland is an important location for another reason, and that is its Blockland initiative, that has a goal of establishing, as well as leading its own blockchain ecosystem. The ecosystem is to be supported by individuals and organizations alike. Due to efforts of Matt Dolan, the State Senator, Ohio even legally recognized blockchain-based data. There are even plans to use blockchain for property deed transfers.
Clearly, blockchain is being not only considered, but actively used in Ohio, which has sparked a positive stance towards the new technology in other states as well. However, that doesn't mean that New York is without support for its own way of thinking, and many others believe that strict regulations are necessary for controlling the blockchain industry.
The two states are polar opposites when it comes to the ways they treat blockchain, and they presented the rest of the US with a choice. In the meantime, companies continue to prefer Ohio and other states that support Ohio's stance, but this division only makes it more difficult for the US to accept crypto and blockchain as a whole.