Though Bitcoin may have once had an image of fringe investment and payment method used only by adherents of obscure Internet subcultures, it has gradually become more mainstream. Its growing value and increasing acceptance has caught the attention of large players in the online world, such as Microsoft. Many of the world’s most successful investors have also purchased the cryptocurrency. This has also resulted in attention from state governments who have put in place various rules governing businesses buying and selling the digital currency.
Washington has become the latest state to regulate businesses trading in digital currencies like Bitcoin, Dogecoin and Etherum. The new regulations in Washington went into effect on July 23 and were the result of a bill passed in the state legislature back in April. While the measure has been presented by state authorities as a way to protect consumers, not everyone in the cyprocurrency community has been happy with it.
The state’s new digital currency regulations are mainly aimed at digital exchanges, which are businesses that let their customers buy and sell cyrptocurrencies with US dollars. Exchanges are now regulated under the state’s money transmitter laws. These laws have previously been applied to companies that allow individuals and businesses to send or receive money outside of the traditional banking system, such as Western Union.
Bitcoin exchanges who serve customers in Washington must now comply with a wide variety of regulations. They have to obtain a license from the state’s Department of Financial Institutions, are subject to third-party audits of their systems to ensure they’re secure, must maintain virtual currency reserves that equal funds their customers have on deposit with them and are required to post a surety bond in an amount ranging from $10,000 to $550,000.
Washington’s latest digital currency regulations have led to some of the biggest names in the industry to pull out of the state, claiming that complying with the regulations is too impractical and expensive. Exchanges Bitstamp, Bitfinex, Kraken and Poloniex have all issued statements to their customers from Washington informing them that they would be discontinuing their operations in the state.
While some Bitcoin users have been unhappy with the news, fearing that it would make it more difficult for cryptocurrency users and investors in Washington to go about their business, some firms in the digital currency industry have opted to continue their operations in the state. This is the case of Coinme, an operator of Bitcoin ATM machines, as well as Coinbase, the largest Bitcoin exchange service in the world.
Dil Bole Oberoi
