“Cryptohating legislature.” A Reddit user coined the phrase after Washington passed a cryptocurrency regulation. An update to the Washington Uniform Money Services Act, many fintech businesses must now secure licenses, submit to disclosure requirements, and implement investor safeguard measures.
Washington Cryptocurrency Regulations: Registration, Disclosure, Consumer Safeguards
Washington State’s money transmitter bill — the Washington Uniform Money Services Act — now includes crypto-regulatory parameters. Moving forward, token exchanges must:
- Secure operating licenses from the Washington State Department of Financial Institutions;
- Submit to third party data audits; and
- Adhere to a surety bond system.
The law doesn’t just apply to exchanges operating out of Washington State; instead, it applies to all exchanges that accept Washington State residents.
Many crypto enthusiasts didn’t take the news well, but Charles Clark, who helped draft Washington’s new rules, is surprised by the backlash. He reminded, recently, that the state issued similar guidance way back in 2014 when it published an alert highlighting FinCen’s position that exchanges should register with public banking authorities.
Clark also explained: “We had these old regulations for money transmitters in the state, and they were clearly meant for older business models. The virtual currency industry had issue with that. This gives them some clarification and guidance.”
Some Exchanges Flee State; Major One Stays
Several exchanges — like Kraken, Poloniex, and Bitfinex — are no longer allowing evergreen state residents to use their services. The popular Coinbase, however, decided to stick it out and comply with the regulations.
The Divided States of Crypto America
Some states are trying to attract blockchain startups by scrubbing regulatory roadblocks from law books. For example, New Hampshire recently updated its code to exempt blockchain and fintech businesses from certain registration requirements. Nevada, for its part, illegalized taxation on token transactions.
On the flip side of the token, other states like New York and now Washington — ostensibly more focused on consumer protection concerns — are taking a more cautionary approach and implementing registration and licensing requirements.
Connect With A Blockchain Lawyer
Kelly / Warner works with some types of blockchain and fintech businesses. Let’s talk.
Atkins, D. (2017, August 01). New Bitcoin regulations shake up Washington state’s cryptocurrency industry. Retrieved September 16, 2017, from https://www.geekwire.com/2017/new-bitcoin-regulations-shake-washington-states-cryptocurrency-industry/ Althauser, J. (2017, July 28). Washington State Requires Bitcoin Exchanges to Secure Licenses. Retrieved September 16, 2017, from https://cointelegraph.com/news/washington-state-requires-bitcoin-exchanges-to-secure-licenses