Digital currency exchange Coinbase said today that it will stop serving customers in Hawaii following regulatory changes in the US state.
The startup said that it received word last September from the Hawaii Division of Financial Institutions that it would be required to hold cash reserves equal to any digital currency-denominated funds held for its customers. Citing the cost burden this requirement creates, Coinbase said that it would require its customers in Hawaii to close their accounts in the next 30 days and remove any funds they may be using the service to store.
Further, Coinbase said that it would block new customer registrations from Hawaii, a policy decision it said would “indefinite” in light of the regulatory concerns.
However, Coinbase indicated that it could reopen its doors to customers in Hawaii should conditions improve, citing a push to create a blockchain working group in the state’s legislature as a positive development.
The startup went on to say:
“Although it comes as little consolation to Hawaii customers, Coinbase hopes to work with policymakers to either change the law or to encourage the DFI commissioner to revisit her existing policy discretion under Hawaii law. We are heartened that members of the Hawaii State House of Representatives have recently introduced a bill that would create a digital currency and blockchain working group.”
It’s not the first time that Coinbase has closed up shop in a US state following regulatory concerns. In June 2015, Coinbase cited a similar move by the Wyoming Division of Banking to require commensurate cash reserves when it stopped serving customers in the state.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Coinbase.
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