An Open Letter to Bloomberg on Modern BitLicense Logic

Tue Dec 27 22:43:16 PST 2022

https://thecapital.io/article/an-open-letter-to-bloomberg-on-modern-bitlicense-logic--MMvQpMQ0EbzeqKBTjBZ

> Dear Bloomberg:
>
> Thank you for pioneering innovation spanning all facets of global finance.
>
> For the last 15 years, Bloomberg has served as a wise friend offering
> daily, quality inspiration. Interviewing Mayor Mike Bloomberg on occasion
> as a young journalist and advancing to become a global executive and
> regular Bloomberg Breakaway attendee has fostered a dream of learning from
> top global business idols.
>
> Forever inspired by Bloomberg’s pioneering contributions to the culture of
> New York and global financial innovation, today’s memo highlights our now
> eventful journey to fundamentally modernize New York's BitLicense and
> global regulatory logic.
>
>    -
>
>    Our global team
>    <https://drive.google.com/file/d/1S3hI4G7QYR7PmlKlc7oQHhl4RnroLYF-/view?usp=sharing> is
>    comprised of seasoned professionals who cumulatively represent decades of
>    industry experience across various fields and disciplines.
>    -
>
>    Our strategic partnerships
>    <https://news.bitcoin.com/ternio-joins-visas-fast-track-program-as-new-enablement-partner/> with
>    the world’s leading financial, healthcare services <http://mydr.co/> and
>    mobile payments providers support the key aim of our endeavor: to attain
>    the legitimate financial inclusion and economic prosperity of all the
>    excluded, under-privileged and under-served, offering financial inclusion
>    and global citizenry.
>
> Pioneering global virtual currency innovation is in part due to pedigree
> responsibility as a “Bill and Melinda Gates Scholar,” (UG) a “Blockchain
> Scholar” (GR) and a principle creator of “United Nations AudioVisual
> Library on International Law
> <https://drive.google.com/file/d/0BweeaClFZ8c0dDNDWGFveVFTXzlOTjhXY2tKS2FZN2VKc2VN/view?usp=sharing>.”
> Humble scholars and UN esteem are indeed supportive. However, our working
> example of success is modeled on Bloomberg's business of international
> excellence, pioneering many of the world's greatest financial systems and
> technology frameworks out of New York.
> *The New York BitLicense vs. Global Regulatory Arbitrage*
>
> The 2015 BitLicense mandate was envisioned as synonymous with New York’s
> leadership of next-generation global innovation. New York’s contemporary
> virtual currency innovation rests with a modern BitLicense with
> cross-border logic (similar to New York human rights law
> <https://dhr.ny.gov/law#HRL298a>).
>
>    1.
>
>    Today many New York firms have various legacy regulatory arbitrage
>    frameworks.
>    2.
>
>    The utility concept behind virtual currency is in its cross-border
>    appeal.
>    3.
>
>    Modern European regulation shares this logic. New York’s BitLicense
>    does not, therefore creating a virtual currency “Crypto Bank” regulatory
>    arbitrage loophole between Europe and New York.
>
> New York banks’ traditional engagement of regulatory arbitrage has
> overflowed the BitLicense and correspondingly is responsible for global
> virtual currency marketplace manipulation. Circumnavigating this problem is
> key to modern BitLicense logic. Given the inherent universal cross-border
> nature of virtual currencies, there is no real good reason for New York
> firms under the BitLicense mandate to manipulate other global markets via
> regulatory arbitrage.
>
> Engaging the New York Department of Financial services’ new “Conditional
> BitLicense” framework as a vehicle, we have signed our clear intent to win
> the Superintendent's Conditional Approval and other necessary regulatory
> approvals of modern virtual currency logic.
>
>    -
>
>    BitLicense members today should not be surprised by New York wasting
>    no time issuing modern logic and that virtual currency regulatory arbitrage
>    is a lawless New York rights concern affecting
>    <https://dhr.ny.gov/law#HRL298a> over 1 billion people.
>    -
>
>    European regulation has allowed our team to build these concepts which
>    are theoretically illegal in New York, thus creating global loopholes.
>    -
>
>    Africa is the most concerning “virtual currency regulatory arbitrage
>    market” directed outside of New York and Europe jurisdictions. African
>    consumers are being manipulated most. United States consumers also are
>    affected at various levels. European consumers have a favorable
>    environment, but do not have the “dynamism” New York affords.
>
> Working in New York, European and African jurisdictions as “Blockchain
> Scholars,” we tested the concept of our Modern BitLicense Logic at our
> “sister” University in Africa
> <https://drive.google.com/file/d/1S3hI4G7QYR7PmlKlc7oQHhl4RnroLYF-/view?usp=sharing>,
> and interestingly Goldman Sachs out of New York was a lead investor.
>
> The key observation is that New York banks “own,” or lead investment in,
> the European and African marketplace leaders. At every level, New York’s
> BitLicense is the most significant hurdle to the global virtual currency
> industry. Given our own experience in these markets, we have found that
> Goldman Sachs has fine tuned global virtual currency regulatory arbitrage.
> To be fair, we have reported on various other Silicon Valley firms
> leveraging the BitLicense, given that Valley firms like Robinhood
> <https://thecapital.io/article/robinhoods-brand-fake-vs-paypals-crypto-corruption-MLic2ot6v5Vurqr5xBT> use
> New York banks, like Goldman Sachs, as a key actor.
>
> Note, as some of the industries top “real global scholars” we understand
> it would be a mistake to be adversarial to the current New York
> environment. Like Boomberg, we aim to be very impressive in terms of
> successfully shepherding/persuading meaningful New York innovation.
> *The Art of Diplomacy*
>
> Rather than a merry-go-round, the process of change is like a slide, and
> Modern BitLicense Logic is necessary. As a matter of New York law, there is
> no other option. The process of filing complaints or legal mediation is
> sub-par. Furthermore, if virtual currency firms want to game regulatory
> markets they honestly should forfeit the prestige of New York’s BitLicense.
>
> 2020 will go down in history as New York banks continued to profit heavily
> under regulatory arbitrage frameworks while virtual currency reached global
> proportions. New York’s newly announced “Conditional BitLicense” framework
> offered our group the perfect opportunity to earn a “Conditional License”
> and suggests advancing the BitLicense mandate with “modern logic.”
>
>    -
>
>    The interests ensured through interpretations of specific provisions
>    in the existing national and supra-national legal framework (civil law,
>    securities law, bankruptcy law, international human rights law) call for
>    New York to clarify the rights of the public and obligations of BitLicense
>    members engaged in the global virtual currency economy.
>    -
>
>    BitLicense regulation must preserve a technology-neutral,
>    principle-based, non-discriminatory framework for the next generation of
>    modern New York virtual currency public policy, naturally to support
>    innovation within the limits imposed by overriding international public
>    interests.
>
> As a proud New Yorker, the only option is to be a “real scholar,” and the
> job would not be complete without New York regulator approval and campaign
> for cross-border modernization of the BitLicense logic in any way possible.
> *Vast Undue Economic Hardship*
>
> Bloomberg has championed actions to promote an inclusive economy -- one in
> which people have the chance to move themselves and their families out of
> poverty, one in which systemic racism does not limit opportunities and one
> in which all people can fully participate. Without this inclusivity, the
> global economy will not be able to live up to its full potential and people
> will suffer.
>
> As we have reported
> <https://thecapital.io/article/new-yorks-raging-regulatory-arbitrage-racket----MLKEXnlOV4fWpOeq5tY>,
> virtual currency fraud is a serious problem for such a developed country as
> the United States, whose bank regulators have drawn attention to the
> increase of these crimes. Having discovered that an unregulated virtual
> currency sphere (such as in Africa, or other developing markets) is very
> popular among virtual currency fraudsters
> <https://www.americanbanker.com/news/jpmorgan-chase-warns-of-upcoming-fine-over-internal-controls>,
> the New York State Department of Financial Services concluded that this
> kind of regulatory fraud was threatening US national security.
>
> Research on the social importance and credibility
> <https://thecapital.io/article/robinhoods-brand-fake-vs-paypals-crypto-corruption-MLic2ot6v5Vurqr5xBT> of
> good institutional design from an organizational perspective seeks to
> prevent undue hardship requiring significant expense or difficulty
> (including a significant interference with the safe or efficient operation
> of international operations due to the seniority system of New York banks
> who are playing global markets).
>
>    -
>
>    Factors to be considered in determining whether an undue economic
>    hardship exists shall include, but not be limited to, special requirements
>    or conditions that are imposed upon an applicant or class of applicants in
>    circumstances where similar requirements or conditions are not imposed upon
>    other applicants.
>    -
>
>    Consumer protection is an umbrella term covering a group of laws and
>    organizations that protect the rights of consumers and foster the free flow
>    of accurate information in the marketplace. Consumer protection laws are
>    designed to prevent businesses from engaging in fraud or unfair practices,
>    to protect individuals from scam artists, and to identity thieves and
>    crooks.
>
>
>    -
>
>    A New York State resident or corporation is in violation if found to
>    have contributed to an act committed outside New York State against a
>    resident of this state or against a corporation organized under the laws of
>    this state (or authorized to do business in this state) that would
>    constitute an unlawful discriminatory practice if committed within New York
>    State.
>    -
>
>    If the New York State has reason to believe that a non-resident person
>    or foreign corporation has committed or is about to commit outside of this
>    state an act which if committed within this state would constitute an
>    unlawful practice, such act is in violation.
>
> Speaking generally, at least during its 2015-2020 implementation phase,
> the BitLicense has likely contributed to increased cross-border virtual
> currency market manipulation. Specifically, we reference our individual
> hardship example in New York, Europe and Africa with concern to Goldman
> Sachs’ cross-border manipulation as a violation of New York Human Rights
> law.
> *New York Human Rights Law*
>
> Our analysis of the factors that drive cross-border differences in the
> implementation of BitLicense reform link the resulting heterogeneity to
> cross-jurisdictional arbitrage. In this manner we identify New York in a
> “virtual currency regulatory crisis” – to the extent that the BitLicense is
> unevenly implemented – as a source of new and unchecked global financial
> risk. Given the nature of traditional regulatory arbitrage, it is key to
> differentiate the BitLicense and understand New York’s universal nature
> <https://dhr.ny.gov/law#HRL298a> of Human Rights Law.
>
>    -
>
>    The science of pure virtual currency design and human rights are
>    universal movements to end ins
>    <https://en.wikipedia.org/wiki/Institutionalisation>titutionalized
>    <https://en.wikipedia.org/wiki/Institutionalisation> discrimination
>    and disenfranchisement
>    <https://en.wikipedia.org/wiki/Disenfranchisement_in_the_United_States>,
>    and to offer quality consumer financial product access without cross-border
>    regulatory segregation.
>    -
>
>    We trust that virtual currency regulatory arbitrage can be addressed
>    via BitLicense modernization and that New York regulators share our logical
>    provisional interpretation of cross-borders with respect to human rights.
>
> Our experience in Europe and Africa points to the necessity to work with
> New York regulators directly without BitLicense member interference. This
> approach is not to purposely irritate the esteemed Superintendent or rock
> the boat that is New York State and risk disrupting the system that
> guarantees our future.
> *Conditional BitLicense Approval*
>
> Modern BitLicense Logic’s opportunity is to meet a new global standard for
> virtual currency regulatory innovation while protecting market integrity by
> stringent standards applicable to all law-abiding business enterprises. In
> our case, a few approvals are necessary and are proposed via a hybrid model
> under the supervision of the Superintendent.
>
> Following this desire, we have navigated the five step process for
> Conditional review.
>
>    1.
>
>    *Inform*: Applicants inform NYDFS of the intent to collaborate with a
>    specific BitLicensee and provide a copy of the draft agreement between the
>    applicant and the BitLicensee.
>    2.
>
>    *Submit: *Applicants submit information on the expected type of
>    business and the perceived risks, among other things.
>    3.
>
>    *Review: *NYDFS begins its substantive review after all of the
>    requested documentation has been submitted.
>    4.
>
>    *Contract: *NYDFS and the applicant enter into a supervisory agreement
>    defining the scope of the applicant’s business, shared responsibilities
>    with its sponsor BitLicensee and NYDFS’ level of oversight.
>    5.
>
>    *Approve:* If NYDFS approves the application, a Conditional BitLicense
>    is issued.
>
> Every day of delay in ambiguity of Modern BitLicense Logic poses a problem
> for those who want to offer additional products and services at
> international scale while staying within the letter of the law. Currently,
> we believe that our Conditional application is ready to enter stage four
> and seek to begin negotiation of the supervisory agreement.
>
> Bloomberg as the prime example of global prestige and success fuels our
> desire to be best in class in providing global virtual currency financial
> services out of New York.
>
> Warm regards,
>
> *Gunnar Larson*
> Bill and Melinda Gates Scholar | Blockchain Scholar
> Conditional BitLicense Applicant (Global Team Lead)
> New York, New York 10001
>
> --
> *Gunnar Larson - xNY.io <http://www.xNY.io> | Bank.org <http://Bank.org>*
> MSc
> <https://www.unic.ac.cy/blockchain/msc-digital-currency/?utm_source=Google&utm_medium=Search&utm_campaign=MSc-Digital-Currency-North-America&utm_term=blockchain%20unic&gclid=Cj0KCQiAyJOBBhDCARIsAJG2h5ctwwMz0MRbVSk-LaYD-GMU5UgDSw7ynxbGr_a7SkaFAZzJc1-pzxEaAi4NEALw_wcB>
> - Digital Currency
> MBA
> <https://www.unic.ac.cy/business-administration-entrepreneurship-and-innovation-mba-1-5-years-or-3-semesters/>
> - Entrepreneurship and Innovation (ip)
>
> G at xNY.io
> +1-646-454-9107
> New York, New York 10001
>
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