In response to the New York Attorney General’s demands from cryptocurrency exchanges that they provide him with significant details about their operations, the CEO of San Francisco-based Kraken has announced that he intends not to answer those questions. Since the Attorney General had announced his intention to publicize any companies not answering his questions, Kraken’s move undercuts any public relations moves the Attorney General’s office may have attempted to use to force Kraken into submission.
Kraken was one of the companies that decided to leave New York after the creation of the state’s infamous BitLicense, a regulatory move touted by New York as providing a credible framework in which Bitcoin and cryptocurrency businesses could continue to operate within the state, but which was denounced by cryptocurrency enthusiasts as an insurmountable hurdle for startups to navigate.
While the New York Department of Financial Services claims that the BitLicense has stimulated interest in cryptocurrency, only six businesses have received BitLicenses to operate within the state. And now that the Attorney General’s office is demanding information from companies that don’t even operate within the state, one cannot describe New York’s business atmosphere as anything close to friendly towards Bitcoin, cryptocurrency, or blockchain companies.
Kraken’s CEO pointed out the short turnaround time requested by the Attorney General’s office, and the public nature of the request, making it clear that the Attorney General’s request is more of a public relations campaign directed towards cryptocurrency exchanges rather than an honest attempt at getting information about the companies’ operations. Whether Kraken’s non-response will result in action taken by the Attorney General remains to be seen.
New York politicians are famously disrespectful of state borders, having a tendency to meddle in the affairs of businesses operating in other states in an attempt to shut down activity they don’t like. While the Attorney General’s office probably won’t be able to affect the business of a company that is headquartered in California, don’t be surprised to see the Attorney General try to take some sort of action against a company that won’t kowtow to his demands.
Bitcoin investors won’t have anything to worry about, since New York is already unfriendly to Bitcoin business and this demand won’t change that one iota. But if this the first salvo in New York’s attempt to force its regulatory regime on Bitcoin and cryptocurrency businesses operating outside New York then it could be something to which investors need to pay attention.