At least 15 digital-currency exchanges have blocked New York state residents from accessing their services—and at least one that was founded in New York City has packed up and moved—instead of complying with new regulations.

The move followed the Aug. 8 application deadline for the New York Department of Financial Service’s BitLicense.The license, which had been in the works for more than a year before it took effect on June 24, consists of a series of regulations that apply to companies that transmit, store, buy, sell or issue digital currencies.

BitLicense is a series of regulations developed under the leadership of former Superintendent of Financial Services Ben Lawsky. Lawsky left his post at the end of June.

Since the deadline, companies have been blocking New York state IP addresses, effectively cutting off customers in that area, instead of complying with the regulations, which they say are too onerous.

One of the first companies to deny service to New Yorkers was Shapeshift, an exchange founded and led by Erik Voorhees, who has worked with or founded several other bitcoin companies.

Voorhees, in an interview, said the cost of applying for a BitLicense was too steep—and that the license carried unpalatable regulations like requiring companies to turn over sensitive user data.

Those who apply for a BitLicense must pay a $5,000 nonrefundable application fee, but the total cost of obtaining it can be much higher, according to executives of companies that did complete the application process.

Coinsetter CEO Jaron Lukasiewicz told Coindesk, a popular blog, that his company had spent $50,000 over the past two years on BitLicense-related expenses. A representative of Coinsetter confirmed this figure to MarketWatch.

George Frost, vice president and chief legal officer at Bitstamp, told Coindesk that his company had spent roughly $100,000 on its application. Bitstamp didn’t respond to a request for comment.

Though $50,000 may not seem like much, it could be prohibitively high for young companies, Voorhees said.

“It basically just destroys the entire bottom tier of entrepreneurship,” Voorhees said.

The DFS says its objective in collecting user data is to prevent money laundering and fraud. But Voorhees maintains that holding on to user data would make it vulnerable to hackers. His company, Shapeshift, currently doesn’t require users of its service to set up an account, asking only for the external keys to their digital-currency wallets.

But despite the griping, Matt Anderson, a deputy superintendent for public affairs at the Department of Financial Services, said the digital-currency community needs to accept responsible regulation if digital currencies are to be widely adopted by consumers.

“Customers need to have a greater degree of confidence that their money’s not going to disappear into a black hole,” Anderson said.

Paxful, a peer-to-peer bitcoin marketplace that was founded in New York City, announced in a blog post published last week that it intended to leave New York state. A company representative confirmed in an email that it is currently “itinerant,” but its employees plan to regroup in Tallinn, Estonia, for the next three months to recruit talent.

Paxful’s chief gripe with BitLicense was a clause that requires companies to receive approval from the superintendent of the Department of Financial Services before making a “material change” to their product or service.

Anderson said that companies like Paxful may have misinterpreted that section of the regulations. He said that companies only need to seek approval when a change is significant and that this type of requirement is “standard in financial regulation.”

“We’re not intending for them to seek approval for minor updates,” he said.

While some firms have raised a stink, Anderson pointed out that 22 firms have applied for the BitLicense, a sign that there is at least some support for regulation.

“There'll be a race to the top for those who are making sure there are strong consumer protections,” Anderson said.

Anderson added that the DFS hopes to finish vetting the applications soon.

“We’re working as expeditiously as possible, and we hope to have approval soon, in the coming weeks or months,” Anderson said.