After rumors of Coinbase not working for users located in Wyoming, Coinbase has since come out with an announcement that they will be indefinetly suspending service to users in Wyoming. This comes from an issue with The Wyoming Division of Banking in which recently communicated regulatory policy causes uncertainty for the legality of digital currency operations.
Also read: Legislators to Introduce Pro-Bitcoin Bill in New Jersey
Coinbase, in their post stated:
“Although we strive to provide continuous access to Coinbase services, 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.”
Since Coinbase is ceasing business in Wyoming, it is likely that more companies will follow suit and also pack up shop. The Wyoming Money Transmitter Act requires special License of companies which offer hosted Bitcoin wallet services. In order to hold such a license, companies must hold and maintain a dedicated fiat reserve equal to the face value of all Bitcoin held by the company. It is completely impractical for a company to hold all users Bitcoin plus the value of those holdings in fiat, doing so would require an unreasonably large holding of liquid assets. Such an act makes Businesses like Coinbase completely impractical in Wyoming and will seriously inhibit the ability for the industry to develop in the state.
What do you think about the Wyoming Money Transfer Act? Comment below!
Images via Coinbase and Wikipedia.