New York to Bitcoin Startups: Get Permission • Hacker News Board

Re: New York to Bitcoin Startups: Get Permission

#21

Post by nmrm » Mon, Jul 21, 2014, 9:10 PM UTC

Ryan_Singer wrote: post #18

fred_durst wrote: post #16

> 1. Submit fingerprints of all founders (and employees) to the FBI and disclose personal financial information of founders and officers to NY State. > 2. Require them to hold an undetermined amount of U.S. dollar funds in bonds or trusts. Startups will not be able to predict the bonding or capitalization requirements until after they apply, making it difficult to project expenses or raise money. > 3. Conduct expensi…

There is a difference between: * Coinbase: A startup that holds millions of dollars worth of bitcoin for mostly consumers * The reddit tip bot: a non-profit community tool that explicitly discourages holding more than a dollar or two * Blockchain: A startup that holds no money for anyone, but writes and serves software that helps people hold their own money online. Do you think all three of these groups should go thr…

Professional auditing and security testing should be necessary for any piece of software from which it's possible to drain large sums of money, regardless of who's running the software or holding the money. In fact, I'd argue anything less constitutes an ethical breach on the part of the lead engineer(s).

I'm not really sure why that particular regulation is so onerous in any of these situations, since any responsible team would be thinking about security throughout, including and especially post-development.

At least in principle (maybe you'd prefer different auditing standards or practices -- that's what I mean by in principle).

edit: of course each of these is a different sort of service, and different levels of risk management are appropriate. In particular, the case of Blockchain seems like a real quagmire. I guess it would probably depend heavily on the revenue model.

Really my only point is that I would have a really hard time sleeping at night if I had to sign off on not applying state-of-the-art auditing and testing techniques any of these, even Blockchain. Maybe I'm too crotchety and old-school for bitcoin.

Re: New York to Bitcoin Startups: Get Permission

#22

Post by Ryan_Singer » Mon, Jul 21, 2014, 9:13 PM UTC

nmrm wrote: post #21

Ryan_Singer wrote: post #18

Earlier quoted context omitted.

There is a difference between: * Coinbase: A startup that holds millions of dollars worth of bitcoin for mostly consumers * The reddit tip bot: a non-profit community tool that explicitly discourages holding more than a dollar or two * Blockchain: A startup that holds no money for anyone, but writes and serves software that helps people hold their own money online. Do you think all three of these groups should go thr…

Professional auditing and security testing should be necessary for any piece of software from which it's possible to drain large sums of money, regardless of who's running the software or holding the money. In fact, I'd argue anything less constitutes an ethical breach on the part of the lead engineer(s). I'm not really sure why that particular regulation is so onerous in any of these situations, since any responsibl…

For the Reddit Tip Bot?

Re: New York to Bitcoin Startups: Get Permission

#23

Post by xorcist » Mon, Jul 21, 2014, 9:16 PM UTC

fred_durst wrote: post #16

> 1. Submit fingerprints of all founders (and employees) to the FBI and disclose personal financial information of founders and officers to NY State. > 2. Require them to hold an undetermined amount of U.S. dollar funds in bonds or trusts. Startups will not be able to predict the bonding or capitalization requirements until after they apply, making it difficult to project expenses or raise money. > 3. Conduct expensi…

That would depend entirely of "handle other people's money" actually mean. There's a huge difference between the different players in this space. Just because they're in the same ecosystem doesn't mean the same regulations should apply.

I am personally intrigued by point 4, "any untouched asset after five years is abandoned property". So, if I deposit money in my account, it's not mine after five years? Where does it work like that?

Re: New York to Bitcoin Startups: Get Permission

#24

Post by nmrm » Mon, Jul 21, 2014, 9:20 PM UTC

Ryan_Singer wrote: post #22

nmrm wrote: post #21

Earlier quoted context omitted.

Professional auditing and security testing should be necessary for any piece of software from which it's possible to drain large sums of money, regardless of who's running the software or holding the money. In fact, I'd argue anything less constitutes an ethical breach on the part of the lead engineer(s). I'm not really sure why that particular regulation is so onerous in any of these situations, since any responsibl…

For the Reddit Tip Bot?

The honest answer is that I don't know, because I don't know how much money the reddit tipbot handles or how long the money stays vulnerable to a potential bug in the software. This is criteria I suggest:

> for any piece of software from which it's possible to drain large sums of money

To which I might add "directly" or "quickly" or "covertly", but I think you get the intent. My edit to the parent comment also applies, since none of these is a binary value and risk management should match the assumed risk.

edit: I would say that the fact that it's only a few bucks per user is not relevant, especially if that limit isn't hard-coded.

Re: New York to Bitcoin Startups: Get Permission

#25

Post by fred_durst » Mon, Jul 21, 2014, 9:24 PM UTC

xorcist wrote: post #23

fred_durst wrote: post #16

> 1. Submit fingerprints of all founders (and employees) to the FBI and disclose personal financial information of founders and officers to NY State. > 2. Require them to hold an undetermined amount of U.S. dollar funds in bonds or trusts. Startups will not be able to predict the bonding or capitalization requirements until after they apply, making it difficult to project expenses or raise money. > 3. Conduct expensi…

That would depend entirely of "handle other people's money" actually mean . There's a huge difference between the different players in this space. Just because they're in the same ecosystem doesn't mean the same regulations should apply. I am personally intrigued by point 4, "any untouched asset after five years is abandoned property". So, if I deposit money in my account, it's not mine after five years? Where does i…

#4 does not mean New York State owns it forever. It is intended to prevent companies from having an incentive to create business practices based on the hope that people will forget about or abandon funds etc. A customer can claim those funds by going here:

https://www.osc.state.ny.us/ouf/

Your comment is kind of what I'm talking about. You do not know nearly enough about this stuff to start a Bitcoin startup judging by the fact that you don't even know what unclaimed property is. Therefore I hope regulations like this prevent you and other obviously unqualified people from handling other peoples money.

EDIT: I came out a bit harsh on this and I apologize. I intended to use it as an example of you likely having the technical ability for such a project but not the financial knowledge, which in my opinion is the dangerous situation these regulations will hopefully prevent.

Re: New York to Bitcoin Startups: Get Permission

#26

Post by greenyoda » Mon, Jul 21, 2014, 9:31 PM UTC

xorcist wrote: post #23

fred_durst wrote: post #16

> 1. Submit fingerprints of all founders (and employees) to the FBI and disclose personal financial information of founders and officers to NY State. > 2. Require them to hold an undetermined amount of U.S. dollar funds in bonds or trusts. Startups will not be able to predict the bonding or capitalization requirements until after they apply, making it difficult to project expenses or raise money. > 3. Conduct expensi…

That would depend entirely of "handle other people's money" actually mean . There's a huge difference between the different players in this space. Just because they're in the same ecosystem doesn't mean the same regulations should apply. I am personally intrigued by point 4, "any untouched asset after five years is abandoned property". So, if I deposit money in my account, it's not mine after five years? Where does i…

"I am personally intrigued by point 4, 'any untouched asset after five years is abandoned property'."

That's how bank accounts in NY State currently work. However, if your account has been idle for a while, your bank tries to contact you to tell you about it. If you have on-line banking, logging in to your account usually makes it active again.

Also, in the event that your money does get turned over to the state, you can ask the state to return it to you.

I think this law is primarily designed to ensure that if people die without leaving a will, the funds will go to the state rather than to the bank. If heirs (e.g., next of kin) turn up eventually, it's easier to go to the state's web site and look for unclaimed property under someone's name than to try to figure out which of hundreds of banks the deceased had his account at.

Re: New York to Bitcoin Startups: Get Permission

#27

Post by wpietri » Mon, Jul 21, 2014, 9:32 PM UTC

thinkcomp wrote: post #14

rlpb wrote: post #12

Earlier quoted context omitted.

Sounds like he cannot comment for legal reasons. On the other hand, assuming that you have filed a lawsuit against Coinbase, it sounds like you can no longer pass neutral comment on the matter. Something you seem to have conveniently not mentioned.

I've written about the lawsuit often enough on HN that I'm routinely criticized for writing too much. Of course, if I don't bring it up, I must be trying to hide it. In any event, there's no legal reason why he couldn't comment. He's not involved, except to the extent that his own company might also be ignoring the law and thereby breaking it--which I have no idea if it's the case or not. But plenty of startups do.

The bulk of readers are not going to know your history. I didn't.

It doesn't take a lot to add "[full disclosure: I'm suing Coinbase]" when you opine on Coinbase. Having somebody else bring it up first definitely reduces your credibility.

Re: New York to Bitcoin Startups: Get Permission

#28

Post by starkness » Mon, Jul 21, 2014, 9:39 PM UTC

nmrm wrote: post #21

Ryan_Singer wrote: post #18

Earlier quoted context omitted.

There is a difference between: * Coinbase: A startup that holds millions of dollars worth of bitcoin for mostly consumers * The reddit tip bot: a non-profit community tool that explicitly discourages holding more than a dollar or two * Blockchain: A startup that holds no money for anyone, but writes and serves software that helps people hold their own money online. Do you think all three of these groups should go thr…

Professional auditing and security testing should be necessary for any piece of software from which it's possible to drain large sums of money, regardless of who's running the software or holding the money. In fact, I'd argue anything less constitutes an ethical breach on the part of the lead engineer(s). I'm not really sure why that particular regulation is so onerous in any of these situations, since any responsibl…

We're in the process right now of writing up a more in-depth policy proposal, but you're spot on in terms of different levels of risk management. And we're not at all against security testing, which is also one of the great benefits of FOSS. ("Given enough eyeballs, all bugs are shallow.")

And the audits comprise financial audits as well, which surely make sense for bitcoin exchanges and companies holding funds, but not so much for open source projects or technologies that are built around bitcoin but where no funds are held.

That said, the actual regulatory proposal has many more requirements than even mentioned in the article (including quarterly reports to the NY State Superintendent, collecting of user data, and the possibility of being denied a license without a system for due process in place), and things that the creator of a Reddit tip bot surely couldn't comply with.

Re: New York to Bitcoin Startups: Get Permission

#29

Post by 3pt14159 » Mon, Jul 21, 2014, 9:40 PM UTC

fred_durst wrote: post #16

> 1. Submit fingerprints of all founders (and employees) to the FBI and disclose personal financial information of founders and officers to NY State. > 2. Require them to hold an undetermined amount of U.S. dollar funds in bonds or trusts. Startups will not be able to predict the bonding or capitalization requirements until after they apply, making it difficult to project expenses or raise money. > 3. Conduct expensi…

What is the US's obsession with fingerprint collection?

The rest of it I can sorta understand, provided that society is viewing Bitcoin less as a weird internet thing, and more as a money thing, I can understand regulators wanting to treat Bitcoin institutions like financial institutions, but collecting fingerprints just to start a business seems so 1984.

Re: New York to Bitcoin Startups: Get Permission

#30

Post by starkness » Mon, Jul 21, 2014, 9:43 PM UTC

greenyoda wrote: post #26

xorcist wrote: post #23

Earlier quoted context omitted.

That would depend entirely of "handle other people's money" actually mean . There's a huge difference between the different players in this space. Just because they're in the same ecosystem doesn't mean the same regulations should apply. I am personally intrigued by point 4, "any untouched asset after five years is abandoned property". So, if I deposit money in my account, it's not mine after five years? Where does i…

"I am personally intrigued by point 4, 'any untouched asset after five years is abandoned property'." That's how bank accounts in NY State currently work. However, if your account has been idle for a while, your bank tries to contact you to tell you about it. If you have on-line banking, logging in to your account usually makes it active again. Also, in the event that your money does get turned over to the state, you…

And one of the key questions is, does this make sense for, say 1000 abandoned dogecoin (current value $0.24) on tipdoge.info? This is why we proposed de minimis exceptions.