Washington regulators recently introduced exchange rules for any firm wanting to allow customers to trade in cryptocurrency. They said they created Senate Bill 5031 to make the ecosystem fair for cryptocurrency exchanges and their customers. However, a number of exchanges have left the area, because they believe the rules were too burdensome. Now Washington lawmakers are defending the bill on the grounds that it helps the exchanges and their clientele.
Poloniex, Bitstamp, Kraken, and Bitfinex are a few of the exchanges that left the area after Washington announced its regulatory requirements in July. Each company provided their reasoning why they stopped servicing Washington area customers.
Bitstamp wrote a letter to its customers back in 2016, saying, “After long and careful deliberation, we are sorry to inform you that due to recent regulatory constraints imposed by the State of Washington, Bitstamp will cease to serve customers from The Evergreen State, effective 20th December 2016.”
Bureaucrats Claim Bill is Good
Charlie Clark, deputy director of the state’s Department of Financial Institutions and director of the authority’s division of consumer services, did not comment on the specific companies that left. He did suggest the restraints were not imposing or negative, though. He mentioned State financial regulators spent months preparing and detailing the bills.
A Payment Compliance article quoted Clark. He said,
The phone calls and conversations were part of an effort to strike a balance between protecting consumers and not heaping onerous and unnecessary regulations on virtual currency start-ups
Clark just wanted businesses to understand that their goal was not to punish new tech businesses, but to protect customers and help startups gain compliance. He did not mention the amount of digital currency firms who are not in compliance or which ones left.
Bitcoin Exchanges Licensed in Washington; Specific Requirements for Operating
Despite this exodus of exchange firms, several remained and decided to apply for licenses. According to Payment Compliance, there are 7 cryptocurrency or blockchain startups licensed by the department of financial services. 5 more have applied for a new license. Furthermore, news.Bitcoin.com recently reported that Gemini had applied for a license and was granted approval to conduct business in the State.
Even though these companies decided to stay, they still have quite a burden to fulfill to gain compliance in the State. A Payment Compliance article elaborated on their burden:
Money transmitters must take out a surety bond based on the dollar volume handled the previous year, ranging from $10,000 to $550,000, with anywhere from $10,000 to $50,000 required for money exchangers.
These companies must also submit to third party audits of their systems, and they must provide additional information to their clientele. Overall, obtaining a license for companies in the state is a time consuming and pricey process to undergo.
Do you think Washington’s regulations are too burdensome? Are regulations necessary? Let us know your opinions in the comments below.
Images via Shutterstock and Bitstamp/Twitter
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