[starkness]

Indeed he's attempting to apply an existing regulatory framework to new technology, which rarely works well.

The point of the article was not to focus on the consumer protection issues, but instead to point out how it could kill startups in the name of consumer protection. We are both in favor of avoiding another Mt. Gox, and the numerous other cases where user funds were lost, which includes escrow of the funds held for users. I'd be curious to get your thoughts as to what you consider the most pressing consumer protection issues, as we're working on another piece that will focus more on these.

[mbreese]

Given the way that some Bitcoin startups have crashed and burned with people's money, I don't think that it's unreasonable to raise the bar significantly in the name of consumer protection.

If that eliminates small startups in the space from directly offering services to consumers, so be it.

[starkness]

Part of the problem is that the regulations aren't just seeking to cover companies that hold peoples' funds (aka private keys), but instead any technology touching the ecosystem. New York doesn't have to and shouldn't conflate the two.

It makes sense to regulate and, for example, require escrow for companies that are holding user funds in order to avoid the exact situation you point out. It doesn't make sense for a web wallet where the user is storing her own keys client-side.

[jasonwocky]

> Indeed he's attempting to apply an existing regulatory framework to new technology, which rarely works well.

I think this sounds more true than it actually is. "Works" is a fairly ambiguous word, but new technology is released into existing regulatory frameworks every day.

[thinkcomp]

I've written up my thoughts in a comment letter to CFPB. See http://www.thinkcomputer.com/20140214.cfpbcomment.pdf.

And if you were aware of the existing regulatory framework, how is any of this different or surprising?