Reputable Bitcoin exchange Coinbase has announced that it will be withdrawing its operations entirely from Hawaii following the instatement of a regulatory policy that Coinbase has deemed “impractical and untenable.” The digital currency exchange, which is used to buy and sell Bitcoin and Ethereum, stated that they will be suspending their services in Hawaii indefinitely.
Hawaii’s regulatory policy was initially brought to their attention in September 2016 by their Division of Financial Institutions (DFI), and according to Coinbase’s announcement, the policy will render their Bitcoin and digital currency operations on the island impossible.
A member of Coinbase’s legal team first expressed their concern about the restrictiveness of the policy soon after it was communicated to them by the DFI
In summary, the regulation will require that the Bitcoin exchange holds a fiat reserve that is equivalent to the amount held as Bitcoin.
Coinbase has been largely indifferent to the procedure but says that they will be unable to continue Bitcoin operations in Hawaii indefinitely due to the policy.
Coinbase cited the impracticality of the regulation as the main obstacle to their continued operations, not to mention the cost and inefficiencies having a redundant cash reserve equivalent to their Bitcoin balance would present.
Coinbase Customers Given a 30-Day Notice to Close their Accounts
Following their announcement, Coinbase has informed its Hawaii customers that they will have thirty days to close their accounts.
The Bitcoin exchange has also suspended the registration of new accounts within the state for an undetermined period of time.
Existing Coinbase customers from the state have the option of transferring their Bitcoin to another virtual wallet or trading in their Bitcoin before the thirty-day window closes.
Coinbase, however, concluded their announcement on a positive note, saying that they hope to bring back their business to Hawaii in the future after if policymakers and the DFI revisit the regulation.
Hawaii May Suffer the Consequences of Coinbase’s Exit
Hawaii’s economy is vastly reliant on tourism.
Bitcoin and other digital currency, therefore, are more relevant than ever, especially when one considers that the bulk of the tourists visiting the state come from Asian countries that have continued to embrace Bitcoin.
As a matter of fact, Coinbase’s exit from Hawaii has been unusually timed, seeing as the State had just sanctioned the introduction of a Bitcoin-friendly working group, which would have opened pathways towards the study of digital currency and blockchain technology, and their relevance in both the public and private sectors of the Hawaiian economy.
Coinbase Hopeful that it will setup Shop in Hawaii Once Again
Despite their abrupt exit, Coinbase mentioned that it had noted and was heartened with the introduction of the Bitcoin-friendly bill in the state’s House of Representatives that would create a digital currency and blockchain working group.