Bitcoin Forum

If you're a U.S. resident, Kraken will not tell you whether they operate in the State you live in.  You just have to go ahead and attempt to register; if they don't have licensure in your State, you're S.O.L.
Therefore, dear readers:
A) If you are registered with Kraken in the United States, please make a post in this thread and tell us what State you live in.
B) Others, who have been unable to register with Kraken because Kraken doesn't have licensure in your State, please post that information too.

Now, let's maintain lists of the States Kraken does and does not operate in, and keep them updated.

I'm based overseas (SE Asia) but have residency in:

Washington state  - Kraken not available yet but I'm "pre-approved" for Tier 3.

Florida - not available

I think CA and NY reside in the "no" column too.
Here's some links to check out on the subject of money transmitter licenses
http://mortgage.nationwidelicensingsystem.org/slr/Pages/default.aspx
http://moneytransmitterlicense.blogspot.com/2010/01/money-transmitter-license-information.html

State-specific info welcome.
Edit:  are there any Vermonters? 

from a three-month-old reddit post
"The one state confirmed to already be supported is South Carolina. They suggest that U.S. users who really want to trade USD register an LLC in south carolina, and sign up under the LLC."
from:  http://www.reddit.com/r/Bitcoin/comments/1rztum/release_the_kraken_part_2/
Which kind of indicates that as of December the vast majority of U.S. residents still could not do any exchanging in and out of fiat.
This link
http://bitcoin.stackexchange.com/questions/19324/what-states-is-kraken-doing-business-in
shows Kraken is a registered MSB in every State, but that's not the same as being licensed.
So it looks like a slow road for Kraken and its U.S. customers.

California definitely not available

I have some news to report.
Somebody I know who lives in New Mexico just registered on Kraken today.
After registering the account, Kraken is giving her the option of verifying at the higher tier levels.
I think I can say that Kraken serves New Mexico.

California - Not available.

Residents of SC, MT, MA, AL, and NM can send in euro deposits.  Not sure if USD is now accepted after their recent partnership with PayCash. 

Washington State not available. Also Poloniex is no longer available in Washington State.

i just signed up in SC tho i have not gone to tier 3 yet or made a deposit

The best way to see if an exchange is eligible to do business in your state is to go to your state's Office of Financial Regulation website and do a search for a license or charter. 

Unfortunately, Kraken, Poloniex, and Bittrex use a "Restricted Location" clause in their terms of service agreement.  If you ever see this, it means that they are not licensed in the majority of states in the U.S. and some countries.  They are operating as under-compliant companies and they will just try to blame you for not knowing the laws in your state.  It also means that they are not financially strong and they could have a number of security risks.  These are all red flags because they cannot meet the high regulatory requirements for operation.  Note Kraken has been sued recently. https://news.bitcoin.com/class-action-lawsuit-exchange-kraken/

So far Coinbase and Gemini have met and exceeded most of the regulatory requirements in the United States of America as of Oct 2017.  Their website has a list of approved states.  Not all states are approved because some states like Hawaii have taken a strong stance against crypto (politics).  Coinbase is pretty much the de-facto standard and Gemini will probably be the future of a Wall Street style crypto exchange.  Bitflyer USA is currently getting licenses in most states and should open close to next year (2018).

Approved States for Coinbase
https://www.coinbase.com/legal/licenses

Approved Countries for Coinbase
https://www.coinbase.com/global?locale=en-US

Areas of Operation Gemini
https://gemini.com/areas-of-operation/

If an exchange is not clear about their legal stuff, then it is best not to do business with them.  Never use peer to peer exchanges like LocalBitcoins.  You may indirectly violate a number of financial laws by acting as an unlicensed broker or money transmitter.  They're also plagued with fraudsters because of the poor escrow and verification systems.  They are like the Craigslist of the Bitcoin world.  Several people in Michigan and Florida have been arrested for trying to exchange crypto by themselves.  Always use an approved and regulated exchange because you could be accused of indirectly supporting criminal activity or violating laws without realizing it.

https://www.coindesk.com/michigan-man-charged-unlawful-bitcoin-exchange/

You should never exchange with strangers.  Whenever you exchange stuff, it should pass through a proper exchange because they have to filter out all of the bad players.  The downside is higher fees due to regulation. Unfortunately, not all of the exchanges out there have been inspected thoroughly.  Eventually, regulators will pressure the weak ones.  You can see BTC-e was seized by the government and Bitfinex bowed out because U.S. regulation was too complicated.

I use Kraken (for now - it sucks) in North Carolina.

https://blog.kraken.com/post/246/kraken-acquiring-coinsetter-and-cavirtex-to-expand/

IT would be great to have an updated list.

For instance, there is NO trading for washington residents.

Glad I found this thread. I was in a bind.

I live in Hawaii, and got dumped from Coinbase in December; I also have a registration with CEX.IO, and bought BTC from them occasionally last year, but a test BTC buy transaction last week (I very seldom buy BTC...I mine...but got in a bind and needed to buy some...considering the present political state of affairs, I though a smaller test tx would be good) caused the bank (Bank of Hawaii) to freeze my debit card. They released the hold immediately...saying it was because it was an "international transaction," but I'm not convinced. But then, I'm not exactly enthralled with buying my BTC from CEX, either, even if it is once in a blue moon.  I think, if I can get my bank manager to commit to letting a tx go through on the debit card, I'll run this last one through CEX and hope for the best. After that, I'm not letting my reserve go down again.

Thanks for listening.