Washington State Requires Bitcoin Exchanges to Secure Licenses

Washington State legislators have started the implementation of new regulations covering digital currency exchanges adopted on July 23, 2017. State legislators passed the money transmitter bill in April and submitted it to Governor Jay Inslee for signing.

New law

Under the new law, cryptocurrency exchanges should secure a license from the Washington State Department of Financial Institutions before they can conduct their business in the state. They are also required to provide a third-party audit of their data systems.

The other requirements include the new transmitter bond requirement, with the amount of the bond to be determined based on the amount of cryptocurrency exchanged in the previous year.

State legislators have started deliberating Senate Bill 5031 in January. The bill aims to amend the state’s existing transmission laws to cover companies that are involved in transactions using digital currencies.

A part of the bill states:

"A licensee transmitting virtual currencies must hold like-kind virtual currencies of the same volume as that held by the licensee but which is obligated to consumers in lieu of the permissible investments required in of this subsection."

Contrasting positions

There were contrasting views and moves of several cryptocurrency exchanges on the new regulation. Exchanges Poloniex and Bitfinex have announced that they would cease operating in the state due to the new law.

New York-based exchange startup Gemini, meanwhile, has secured approval from the New York State Department of Financial Services (NYDFS) to start its operation in Washington in early 2017.

According to NYDFS Superintendent Maria T. Vullo, the license provided to Gemini was the result of the cooperation between the NYDFS and the Conference of State Bank Supervisors, a US institution that oversees the operation of state-chartered financial institutions.