As we gradually witness the rise of the nascent cryptocurrency market, the government is becoming more curious. Currently, the cryptocurrency market is so volatile that the government believes it is imperative to assign stricter regulations on these new instruments.
Recently, the state of Washington passed regulations on cryptocurrencies with an intention of protecting consumers. This has induced mixed reactions from the digital currency community. Moreover, some Bitcoin-related businesses, reluctant to comply with the new regulations, were forced to shut down their Washington operations.
The bill applies to digital exchanges and other similar function mediums where people can trade and store their cryptocurrencies. These exchanges have to comply with Washington’s money transmitter laws and have to obtain specific licenses pertinent to the state’s Department of Financial Institutions.
Moreover, exchanges have to agree to specific security audits and post surety bonds, which would act as a sort of insurance for the exchanges’ customers.
A few prominent cryptocurrency exchanges – including Bitfinex, Kraken, Bitstamp, and Poloniex – ended their operations in Washington states. For them, the new regulations are too restrictive and demanding. According to Kraken, the regulations induced “high operating costs” and imposed an insurmountable amount of compliance requirements. These exchanges prescribe that Washington customers do business in other jurisdictions, where the law is retrospective to Washington state.
The new policies were discussed by cryptocurrency industry entities and government agencies. Neil Bergquist, CEO of Coinme, a company that provides Bitcoin ATMs and other related services in Washington state, thinks that these new policies aren’t going to significantly change cryptocurrency market activities in Washington.
Nevertheless, the digital currency industry has created new jobs and opportunities for Washington State residents. The real concern is how government officials view the market and how they will approach the market’s progression in the future. It’s important that the government’s relationship with cryptocurrency experts is symbiotic.
Felix Shipkevich is a principal of Shipkevich PLLC.PLLC. His practice focuses on providing counsel to FinTech and financial services firms, including financial technology, payments and emerging digital currency space. He has spoken at national panels in the money transmitter space and payments industry. Mr. Shipkevich’s payments practice has brought him into contact with money transmitter registration requirements in all fifty U.S. States.
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