Reddit joins privacy groups to oppose NY bitcoin regulations

Reddit on Tuesday joined privacy groups in criticizing New York's proposed regulations for online currencies, such as bitcoin.

Reddit, the Electronic Frontier Foundation and the Internet Archive said the regulations would infringe on the First Amendment, damage privacy and hurt innovation. 

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"Digital currencies such as Bitcoin strengthen privacy and are resistant to censorship," EFF Activism Director Rainey Reitman said. "We should consider this a feature, not a bug. It's an innovative way of importing some of the civil liberties protections we already enjoy offline into the digital world."

The groups filed their objections as the deadline for comments came to a close.

Earlier this year, New York's Department of Financial Services proposed rules to regulate the online currency after a yearlong study and worries over the collapse of Mt. Gox, a bitcoin exchange in Japan. 

State officials said the so-called BitLicense regulations would be limited and only cover those offering financial services for online currencies and not individual merchants or users.

Those offering financial services would have to undergo background checks, issue regular financial statements and retain records of all business transactions for 10 years. A number of consumer protections would also be put in place.

Critics, though, say the proposal would damage privacy interests.

"NY DFS has proposed this regulatory framework 'to protect consumers and root out illegal activity,' which are important and laudable goals. But as currently written, the BitLicense proposal would also undermine the unique civil liberties benefits digital currencies offer by design," the groups wrote.  

The New York Financial Services Department proposed its rules in July and had extended its comment period to 90 days because of the large public interest. That comment period came to a close on Tuesday. There will also be additional time to comment if changes are made to the proposal.