Consumer Alert: Coinbase Exchange ‘Not Regulated or Licensed’ in California, NY

Coinbase, which announced earlier this week it had launched the first regulated Bitcoin exchange in several states and territories of America, including California and New York, seems to be lacking regulatory approval from both states, according to local regulators.

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Consumer Alert: Coinbase Exchange ‘Not Regulated or Licensed’ in California, NY

Coinbase, which announced earlier this week it had launched the first regulated Bitcoin exchange in several states and territories of America, including California and New York, seems to be lacking regulatory approval from both states, according to local regulators.

Department of Business Oversight (DBO) commissioner Jan Lynn Owen, issued a "consumer alert" on Coinbase's licensing status in California, where she made clarifications on what she qualifies as "erroneous reports."

The document reads:

"Numerous press accounts about Coinbase’s Jan. 26 launch of Coinbase Exchange erroneously reported the Exchange has received regulatory approval from the State of California.

The California Department of Business Oversight has not decided whether to regulate virtual currency transactions, or the businesses that arrange such transactions, under the state’s Money Transmission Act.

California consumers should be aware Coinbase Exchange is not regulated or licensed by the State."

In addition to California's DBO's statement, Matthew Anderson, a spokesman for Benjamin M. Lawsky, the superintendent of New York's Department of Financial Services, declared on Wednesday 28, that Coinbase doesn't hold the proper licenses to operate as a Bitcoin exchange in the state.

Anderson told The New York Times' DealBook:

"We are working with several companies, including Coinbase, on licensing, and will continue to move forward expeditiously. That said, we have not yet issued any licenses to virtual currency firms."

Commenting on NYDFS' statement, Coinbase co-founder Fred Ehrsam, said his company will carry on its work with Lawsky's office "on all Bitcoin matters involving consumers, merchants and the recently launched Coinbase Exchange." Ehrsam further noted that his company is looking forward to "continuing to work together on the completion of New York's BitLicense."

Coinbase co-founders Fred Ehrsam (left) and Brian Armstrong (right)

Coinbase claims on its website that its service is currently supported in 25 states and territories of America, "where Coinbase is either licensed to engage in money transmission, where it has determined that no such license is currently required, or where licenses are not yet being issued by respect to Coinbase's business."

So far, the startup had received money transmission licenses or equivalents from 15 states and territories, including Alabama, Arkansas, Delaware, Georgia, Idaho, Iowa, Kansas, Mississippi, Nebraska, New Jersey, North Dakota, Puerto Rico, Washington and West Virginia.

Numerous Bitcoin companies are waiting for the issuance of Lawsky's BitLicense, including Cameron and Tyler Winklevoss, who unveiled on January 23, their new Bitcoin project - a "next generation Bitcoin exchange" dubbed Gemini, which will be registered and banked in New York. 


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