Coinbase withdraws from Wyoming due to restrictive state laws

Bitcoin exchange Coinbase sent out an email to Wyoming users in June 2015, telling them to close their Coinbase accounts due to a state law that makes business difficult, according to a report by the Casper Star-Tribune.

In a statement on its website, Coinbase said: “Coinbase is indefinitely suspending its business in Wyoming. The Wyoming Division of Banking has recently communicated regulatory policies which we believe will render continued Coinbase operations there impractical. In particular, we understand that the Wyoming Division of Banking interprets the Wyoming Money Transmitter Act to require licensure of entities which offer hosted bitcoin wallet services, and that, as a condition of such licensure, licensees must maintain dedicated fiat currency reserves in amount equal to the aggregate face value of all bitcoin held on behalf of customers. Although Coinbase securely maintains 100% of all customer bitcoin, it is impractical, costly, and inefficient for us to establish a redundant reserve of fiat currency in equivalent value.”

Coinbase first submitted its application for a money transmitter license to Wyoming in September, 2014, according to the Casper Star-Tribune. It withdrew its application on June 1, due to the Wyoming law, the newspaper said.

The Wyoming Money Transmitters Act was passed in 2003, six years before bitcoin was created in 2009.

For information on bitcoin regulations, see the Virtual Currency Today report “Regulation of Virtual Currencies: A Global Overview“.

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