The California’s Department of Financial Institutions (CDFI) has issued a cease and desist warning to the Bitcoin Foundation on the grounds that the organization does not have the proper permit/license to engage in the business of money transmission in the state of California.
According to the letter, if the Bitcoin Foundation doesn’t comply, it’ll be subjected to severe punishments which range from monetary fines to imprisonment. The cease and desist warning is merited in almost all facets, but the according to Jon Matonis, a member on Bitcoin Foundation’s Board of Directors, the CDFI has negated the fact that the Bitcoin Foundation is a ‘nonprofit’ organization.
Furthermore, as Matonis points out, the foundation “does not engage in… the owning, controlling, or conducting of money transmission business.” Rather, its main purpose is to “standardize and promote the open source Bitcoin protocol and they receive generous support from individuals and corporations to advance those objectives.”
In his closing statements in a piece posted on Forbes, Matonis suggests that Bitcoin has the potential to compete with today’s currencies, and that ‘lawful’ businesses are already in the process of setting up infrastructure to support the technology.
“Freedom of choice in currencies is probably the most important free speech issue of our time,” says Matonis.
The Bitcoin Foundation has garnered massive amounts of attention from both novices to deep-pocketed investors. Big timers include the likes of Peter Thiel (co-founder of PayPal) and OpenCoin (a Silicon Valley venture funds backed by companies like Google).