The Wyoming Banking Regulations have been pressing the Coinbase Exchange. Coinbase, a Bitcoin Wallet and Exchange Service Provider has announced the suspension of all operations in Wyoming as a result of state financial regulators’ interpretation of the Wyoming Money Transmitter Act. The exchange already counts with operations serving more than 2.5 million users in 190 countries will now be forced to stop its operations in this State.
Andrea Castillo, Mercatus Center Technology Policy Program Manager says Wyoming’s banking policies are holding back innovative digital businesses like Coinbase. As state regulators currently interpret the law, exchanging Wyomingites’ fiat currency for Bitcoins or depositing Bitcoins in Coinbase “wallets” is an action that requires state financial licensure and the maintenance of a dedicated fiat currency reserve at least equal to the dollar value of all Bitcoins held for all customers.
Castillo explained:
“It is unfortunate for Bitcoin users in Wyoming that their state’s regulatory policies created an unworkable environment for Coinbase. The requirement that virtual currency businesses must keep a 100 percent fiat reserve of customer assets is indeed onerous. Wyoming would benefit by tweaking its money transmitter regulations to more harmoniously apply to the specifics of virtual currency firms.”
With this move, instead of trying to accommodate Bitcoin based business, the Wyoming regulators are squeezing Bitcoin companies to the point they need to shut down operations.
A senior fellow at the Ludwig von Mises Institute, a nonprofit think tank dedicated to research and education, says Wyoming’s banking regulations are squashing innovation in financial services. The State of Wyoming’s decision to require Bitcoin wallet service providers to hold 100 percent fiat currency reserves against all Bitcoin deposits is clearly impractical and unnecessary while it crushes all expectations for Bitcoin companies doing business in the Wyoming State.
The Wyoming Banking Regulations seems to come has a deliberate attempt to suppress the use of Bitcoins in Wyoming, while it shows that digital currency still has a long way to go until it reaches to the general mainstream adoption.