Regulations Could Limit Use of P2P Bitcoin Exchanges Like LocalBitcoins

Although most bitcoin users have been concerned with regulation in terms of how it will stifle innovation and prevent new startups from launching in certain jurisdictions, one of the key elements of the proposed regulations in New York and California could impact the digital commodity’s P2P nature. While we’re not at the point where regulators are making pull requests on GitHub, it appears that trading a small amount of bitcoin for cash could require a license in the near future. A few states are mulling over such regulations right now, which could have a negative impact on peer-to-peer exchanges such as LocalBitcoins.
The language in California and New York
A bill that was recently approved by the California Assembly Committee on Banking and Finance contains some language that could be troubling for individuals who like to trade bitcoins for cash, bank transfers, PayPal, or other means of payment. The bill explains that anyone who wishes to operate a ‘virtual currency business’ must follow a specific list of rules and regulations, which includes applying for a license to operate as a virtual currency business in the state of California. One of the types of virtual currency businesses described in the bill involves: