A bitcoin industry think tank continues to be at odds with digital advocacy groups over their stance on pending legislation in California that seeks to regulate digital currencies.

On Friday, Coin Center executive director Jerry Brito sought to distance his organization from the Electronic Frontier Foundation (EFF) and Copia Institute, which are opposing the law, AB-1326, on the grounds that it will harm innovation in current form. The bill, introduced in February, most recently passed the Senate Transportation and Housing Committee in July.

The EFF and Copia first made their opposition of the law clear shortly thereafter through a formal filing with the Senate Committee on Banking and Financial Institutions. Since then, the EFF has also gone public with its stance on the legislation, advising those concerned about the law to reach out directly to California officials.

Speaking to CoinDesk, Coin Center director of research Peter Van Valkenburgh elaborated on the budding debate between the groups, suggesting that while Coin Center supports the EFF’s efforts on a philosophical level, its opposition isn’t practical given the potential risks that would come should no law pass at all.

Van Valkenburgh said:

“They’re asking that a bill doesn’t pass and praying that the California Department of Business Oversight (DBO) doesn’t apply money transmission laws. The EFF has done amazing work with free speech, but they’ve never worked in financial law. I just think they missed this.”

Lee Tien, a senior staff attorney with the EFF, admitted he wasn’t a “money specialist”, but suggested he believes there is an overemphasis on the application of the law in this field, and that the regulation proposed perhaps doesn’t apply as broadly to the industry as perceived.

“If you’re a developer of code, you’re not likely within the scope of money transmission. In our talks with other companies in the space, many of them are sitting on the sidelines because they’re not within the scope,” he said.

Founded in 2014, Coin Center is funded by donations as well as venture capital from Andreessen Horowitz, RRE Ventures and VC-backed bitcoin industry startups including BitGo, BitPay and Xapo. The EFF, by comparison, is a donor-funded nonprofit that seeks to safeguard civil liberties through its work in advocating for technology.

Question of time

In conversation, Tien emphasized the EFF’s position that there is another component to the legislative process that it hopes will positively influence the bill, time.

Tien suggested it’s possible that AB-1326 could be debated into January 2016, and that it is unlikely to be killed outright even if it faces significant opposition.

Still, he said the EFF remains sensitive to the idea that there is a risk that if the bill is not passed, the more rigid laws applying to financial intermediaries would be enforced against the still-nascent industry.

“If your fear is that the DBO or some other agency is just going to walk all over this territory in the interim, they don’t work that fast,” he said. “It’s not all-in or all-out, we can work together and do a better job if the executive branch is going to wait for legislation.”

Tien made the case that added time would be beneficial for lawmakers, as they would have the opportunity to understand why certain definitions or requirements could be improved from their current form. For example, he cited how traditional definitions of custodianship don’t apply to bitcoin funds, which can be controlled by multiple parties through multisignature wallets.

“We have time to do better, and we should take time to do better,” he continued. “Educating legislators, regulators and staff on tech issues is a marathon, not a sprint.”

Limiting harm

In his remarks, Van Valkenburgh was keen to stress his general alignment with the EFF, suggesting that should the debate be about the merits licensing, he’s not sure Coin Center would support such a strategy toward regulating the industry.

In particular, he argued that he believes most states already have the authority to regulate certain digital currency companies that act similarly to financial institutions.

“There are other ways to deal with a nascent industry,” he said. “That’s not the world that we’re in because the MSB statute in California, just as in 48 of the 50 states and in DC, covers bitcoin companies, so that means we’re already in a world where regulators can demand business get a license.”

Van Valkenburgh sought to categorize AB-1326 as beneficial given that any action from regulators is effectively being tabled while the legislation is being debated.

Further, he argued there are strong benefits to the law, such as language that includes an onramp for startups and the ability for industry businesses to keep permissible investments in digital currency.

Overall, both groups expressed the desire to work together, with the spirit best summed up by Tien, who added:

“I think of this as a disagreement among folks who want the same.”

Debate image via Shutterstock