(Bloomberg) – Airbnb Inc., the second-most highly valued San Francisco-based startup, is suing its hometown over claims the city's rental restrictions violate protections for internet companies and its free-speech rights.

The company is hoping to avoid thousands of dollars in daily fines it could face when a new San Francisco law takes full effect next month. The law, passed with a 10-0 vote by the city's Board of Supervisors, would require Airbnb to make sure that hosts on its platform have registered with the city.

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'Flawed new ordinance'

"While we have attempted to work with the city on sensible, lawful alternatives to this flawed new ordinance, we regret that we are forced to now ask a federal court to intervene in this matter," the company said Monday in a statement. "This is an unprecedented step for Airbnb, and one we do not take lightly, but we believe it's the best way to protect our community of hosts and guests."

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