Bitcoin and Ethereum exchange and wallet provider Coinbase has announced it is quitting Hawaii after new legislation would make operating there “impractical.”
The Aloha State, which previously signaled it wanted to construct “educated” Blockchain legislation, now requires operators to hold fiat reserves at least equal to the amount held as virtual currency.
This stipulation runs in addition to businesses handling virtual currency to obtain a license. While Coinbase says it has “no objection to” this procedure, maintaining a “redundant” fiat reserve would be “impractical, costly and inefficient.”
“The Hawaii Division of Financial Institutions (DFI) has communicated regulatory policies which we believe will render continued Coinbase operations there impractical,” the company wrote in a blog post.
Customers are now asked to withdraw all funds from their wallets and close their accounts.
The move by legislators is unusual in coming just days after the State approved the creation of a working group to study how Blockchain technology could benefit the local economy.
Representatives voted for House Bill 1481 to be passed unamended.
“...[T]he purpose of this Act is to establish a working group consisting of representation from the public and private sectors to examine, educate, and promote best practices for enabling Blockchain technology to benefit local industries, residents, and the State of Hawaii,” an extract from the Bill’s text reads.