Coinbase Renews Wyoming Money Transmitter License Bringing Bitcoin Back to The Cowboy State
Coinbase, one of the largest Bitcoin and cryptocurrency exchanges set out with an ambitious goal to operate in all 50 states and beyond, adhering to every federal and state regulations. That endeavor proved to be a challenge as various states’ regulations had not adapted to the novel distributed ledger payments technology. Although one of the few and first to receive a BitLicense from the State of New York, the Bitcoin exchange giant remained restricted by money transmitter licenses established well before the advent of Financial Technology and Blockchain’s distributed ledger. A variety of states denied or revoked Coinbase’s money transmitter license; some of these states are Minnesota, Hawaii, and Wyoming.
Three years ago in 2015 Coinbase could not operate in Wyoming due to the state’s Money Transmitter Laws and suspended services to its costumers in the state, as well those transferring cryptocurrency to Wyoming form outside the state. Since then Wyoming saw passage of new money transmitter laws in March 2018 and now Coinbase has renewed its Wyoming money transmitter license allowing it to resume operations in the state.
Coinbase Suspends Operations in Wyoming, June 2015
The State of Wyoming restricted Coinbase operations in the state because it’s Money Transmitter Act of 2003 did not define virtual currency, and therefore demanded that businesses with a money transmitter license maintain in fiat currency (or permissible investments) the equivalent amount of Bitcoin and virtual currency being traded or transferred within the state. In June 2015 Coinbase announced it would suspend it’s services in the state of Wyoming indefinitely. A press released published on the company’s website read,
Coinbase is indefinitely suspending its business in Wyoming. . . .we understand that the Wyoming Division of Banking interprets the Wyoming Money Transmitter Act to require licensure of entities which offer hosted 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 funds held on behalf of customers. Although Coinbase securely maintains 100% of all customer funds, it is impractical, costly, and inefficient for us to establish a redundant reserve of fiat currency in equivalent value.
Wyomingites with Bitcoin being held by the exchange were left in disarray and those looking for a legitimate wallet to hold and transfer virtual currencies had nowhere to go.
Wyoming Passes New Money Transmitter Laws Recognizing Virtual Currency
The state saw several lobbying groups sprout in the defense of the new technology. Among these, the Wyoming Blockchain Coalition helped draft a series of new bills in March, 2018. It’s co-founder, Caitlin Long, penned “one of the bills enables money transmitters to return to Wyoming.” House Bill 19, renewed the Wyoming Money Transmitter Act to define and provide an exemption to virtual currency
Sure enough, since March 2018 when Wyoming legislature made headlines for passing crypto-friendly bills, Coinbase now perseveres with it’s renewed Wyoming Money Transmitter License,
AN ACT relating to trade and commerce; amending the Wyoming Money Transmitter Act to provide an exemption for virtual currency
As used in this act: “Virtual currency” means any type of digital representation of value that:
(A) Is used as a medium of exchange, unit of account or store of value; and
(B) Is not recognized as legal tender by the United States government.
This updated act allowed cryptocurrency exchanges such as Coinbase to operate within the state relieved of the cumbersome requirements. Virtual currency would be exempt from fiat currency or permissible investment equivalents for money transmitter licenses.
Coinbase Renews Wyoming Money Transmitter License
In a company press release Coinbase Chief Legal & Compliance Officer, Mike Lempres, announced services would resume in the state with gratitude to the state senators and representatives that allowed this regulation to happen:
“Regulators and legislators can work together to foster innovation by either licensing cryptocurrency money transmissions or exempting cryptocurrency from money transmission laws. The leadership and partnership between the state legislature and Governor Matt Meade allowed for this new legislation to be signed into law, under which cryptocurrency companies in Wyoming are no longer required to double reserve the assets of state residents. Now Coinbase and other compliant, regulated cryptocurrency companies can serve Wyoming customers in the same way we serve customers from nearly every other state.
We are encouraged by this positive transition for Wyoming residents and businesses to once again enjoy the enhanced innovation, economic activity and social benefits of this new technology. We aim to be the most trusted cryptocurrency brand in the space, and as part of that, we seek excellence in compliance and advocate for common-sense policies that allow for innovation. We will continue collaborating with legislators and regulators across the U.S. and worldwide as we work to create open financial system for the world.
Wyoming customers should have access to their accounts, and to the extent any funds (USD or cryptocurrency) were stored in their accounts, they will have access to those funds. If any Wyoming resident is unable to access their accounts or withdraw funds, we encourage them to contact our customer support team to have access restored.”
Felix Shipkevich is a principal of Shipkevich 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.
To read his full profile, click here.