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Bitfinex Will Not Obtain License to Do Business in Washington State

Bitfinex Will Not Obtain License to Do Business in Washington State

Hong Kong-based bitcoin exchange Bitfinex has stopped servicing Washington State customers, reportedly due to the state requiring a money transmitter license.

Also read: Coinbase Exits as Hawaii Requires Bitcoin Companies to Hold Fiat Reserves 

Exiting Washington State, Will Not Obtain License

Bitfinex has recently modified its terms of service which now includes the following clause:

Washington state residents are prohibited from depositing to, withdrawing from, or trading on the Site.

While the exchange did not post any notices on its blog, website or social media accounts, a reddit user posted a message supposedly received from Bitfinex management to his or Bitfinex Will Not Obtain License to Do Business in Washington State
her account.

The message reveals that the exchange has been in discussions with representatives of the Washington State Department of Financial Institutions (DFI) for several months regarding its business and services it provides to Washington customers. The note reads: “DFI representatives take the view that we may not offer our platform services to Washington state residents without obtaining a state money transmitter license in their state”. It further states that:

At this time, we are not obtaining a money transmitter license in Washington and, accordingly, we will no longer be doing business with verified Washington customers, effective immediately.

According to Bitfinex’s terms of service, the only other U.S. states the exchange is not doing business with is New York which it pulled out of back in August 2015 due to the infamous Bitlicense.

Washington State Money Transmitter License

According to the DFI website, digital currency is “a medium of exchange not authorized or adopted by a government”. In Washington, it is included in the definition of “Money Transmission” in the state’s Uniform Money Services Act (UMSA), chapter 19.230 RCW.

However, not all bitcoin exchanges or service providers need to obtain a money transmitter license. According to the DFI:

Companies wishing to transmit money for Washington residents in a digital currency form can contact DFI for a determination whether licensure under the UMSA is required. If it is, a license is required before the company can engage in the activity.

In addition to individual state licenses, money transmission businesses are required to be licensed on the federal level as money services businesses (MSB), with the Financial Bitfinex Will Not Obtain License to Do Business in Washington StateCrimes Enforcement Network (FinCEN) which regulates digital currency. Bitfinex is registered as an MSB with FinCEN under its legal name FGXNA Inc.

The company is, however, not licensed with the U.S. Commodity Futures Trading Commission (CFTC). Last June, the Commission ordered the exchange to pay a $75,000 civil penalty for offering retail commodity transactions without registering as a Futures Commission Merchant as required by the Commodity Exchange Act.

This is the second time this week that a state requiring money transmitter license has driven away a bitcoin exchange. On Monday, Coinbase, which is already licensed in Washington State, announced that it has pulled out of Hawaii, citing a strict money transmitter license rule.

Do you think more bitcoin exchanges will be leaving U.S. states this year due to money transmitter license requirements?


Images courtesy of Shutterstock, FinCEN, and Bitfinex


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Tags in this story
BitFinex, Coinbase, dfi, fincen, Hawaii, License, money transmission, money transmitter, Washington
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Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.