ConsenSys, a leading Ethereum-focused software company, is facing criticism from the blockchain community regarding its lack of a BitLicense to operate in New York State.
To provide some context, the BitLicense is a business license required by New York for companies conducting “virtual currency business activities,” which involves storing, holding, or controlling virtual currencies on behalf of others. It was established in 2015 to regulate cryptocurrency activities and protect consumers.
On October 13, blockchain researcher Huber posted questions about how ConsenSys was able to avoid obtaining a BitLicense, given its extensive involvement in the Ethereum ecosystem, via two posts on X (formerly Twitter).
How is it possible that @ConsenSys does not have or need a BitLicense? It is clear that they are involved in virtual currency activities? Just think of Token Foundry or literally anything they do? @JohnEDeaton1 @Marc_Fagel @StevenNerayoff pic.twitter.com/h2FPAwK34a
— Mr. Huber
(@Leerzeit) October 13, 2023
In one of the two posts, Huber questioned the absence of a BitLicense for ConsenSys, given their involvement in virtual currency activities including Token Foundry and other related ventures.
Token Foundry was a startup founded by ConsenSys in 2018, with the aim of establishing itself as a prominent platform for conducting Initial Coin Offerings (ICOs). As a company that deals with releasing and selling tokens, it appears that it falls under the purview of entities that must obtain a BitLicense.
In a separate post, Huber noted that ConsenSys had been actively trying to “improve” the BitLicense, raising the question of why they had never obtained one themselves.
Consenys is quite active in the cryptocurrency space. Additionally, Bill Hughes, the company’s attorney, clarified in a post that the company has officially filed a request for a deadline extension regarding the IRS broker’s crypto reporting standards.
Today, @Consensys submitted a brief to @USTreasury staff and the IRS, who are working on the notice of proposed rulemaking regarding the IRC Section 6045 reporting requirement for brokers. The letter asked two things:
Firstly, because of the complexity of the proposed… pic.twitter.com/tX9hZpkOOg
— Bill Hughes: wchughes.eth
(@BillHughesDC) October 9, 2023
Hughes made the announcement Monday, stating that ConsenSys has sent a letter to the Internal Revenue Service (IRS) and the U.S. Treasury Department requesting two substantive changes to the proposed regulations.
However, ConsenSys has not publicly responded to the implication that it may violate New York’s registration requirements. As blockchain transparency advocates like Huber dig in, ConsenSys will soon have to answer tough questions.
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