[2017-03-01]Bitcoin Exchange Coinbase Stops Services in Hawaii Due to “Untenable

[renfangfua]

Bitcoin Exchange Coinbase Stops Services in Hawaii Due to “Untenable” Regulation
Prominent Bitcoin and Ethereum exchange and wallet Coinbase announced that it is forced to stop supporting customers in Hawaii due to an “impractical” and “untenable” regulatory policy.

Citing the reason for indefinitely suspending its business in Hawaii, Coinbase revealed:

The Hawaii Division of Financial Institutions (DFI) has communicated regulatory policies which we believe will render continued Coinbase operations there impractical.

Coinbase was first notified of the restrictive regulatory policy by the DFI in September, one that makes it “impossible” for the exchange to operate in the state, according to a member of Coinbase’s legal team.

Fundamentally, the regulation demands Coinbase or other digital currency operators to hold cash reserves equivalent to the value of the digital currency held for customers.

Coinbase adds:

This policy is obviously untenable. No digital currency business – and frankly, no commercially viable business anywhere – has the capital to supplement every customer bitcoin with redundant dollar collateral.

As a result, Coinbase has now made it mandatory for Hawaii-resident users to close their accounts within the next thirty days. The exchange will also halt new account signups in America’s newest state “for the indefinite future.” Customers can either send their bitcoin to an alternative wallet or swap the cryptocurrency for fiat before their accounts’ closure.

The exchange adds that it hopes to open shop in Hawaii in the future by working with policymakers to change the law or by encouraging the DFI’s commissioner to “revisit” the existing policy discretion under Hawaii law.

Coinbase’s exit comes at a time when Hawaii is considering a bitcoin- and blockchain-friendly bill, one that aims to establish a working group toward the exploration of digital currencies and blockchain technology in Hawaii’s public and private sectors.

“Digital currencies such as bitcoin have broad benefits for Hawaii. A large portion of Hawaii’s tourism market comes from Asia where the use of bitcoin as a virtual currency is expanding,” the bill’s text read.

The digital currency exchange said it was “heartened” that members of state’s House of Representatives had introduced the bill and added that it would look forward to working with them.
link:https://www.cryptocoinsnews.com/bitcoin-exchange-coinbase-stops-services-hawaii-due-untenable-regulation/

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[Papa Bear]

Most market Hawaii tourism comes from Asia where the use of virtual currency bitcoin as a growing, so it can also affect the number of Asian travelers who come to visit Hawaii tourism.

[notthematrix]

Most market Hawaii tourism comes from Asia where the use of virtual currency bitcoin as a growing, so it can also affect the number of Asian travelers who come to visit Hawaii tourism.

Use international sites.... bitcoin does not care.

[1Referee]

Most market Hawaii tourism comes from Asia where the use of virtual currency bitcoin as a growing, so it can also affect the number of Asian travelers who come to visit Hawaii tourism.

Use international sites.... bitcoin does not care.

That, and to be honest, nobody cares about what happens in such an insignificant state. The few people that will be "affected" will just need to adapt to the situation and look for alternatives. Nowadays with all the alternatives people have to choose from, it shouldn't be a problem at all. It's not for nothing that Coinbase halt their services so easily there... It's not worth fighting for.

[INRI666]

Most market Hawaii tourism comes from Asia where the use of virtual currency bitcoin as a growing, so it can also affect the number of Asian travelers who come to visit Hawaii tourism.

You overestimate Bitcoin's adoption rate. It's a lot lower than you think. Like 99.9% of travelers to Hawaii from Asia don't know what Bitcoin is. If Coinbase decides to quit, there's always LocalBitcoins.

[noodle_dam]

They stopped their services in Germany, then in Canada (being able to exchange into CAD with vologo) now in a state in the United States.
This is just weird things to be coming from a huge company like this dealing with a global currency such as bitcoin.

Very weird indeed.

[d5000]

At a first glance one could think that this statement confirms that they are doing fractional reserve banking. (And if what they say is true, then that would seem to be common practice in the exchange industry.)

Although, if I think it two times, it may be a different thing because open buy orders not necessarily match the "market cap" of all the coins traded at the exchange. So there may be situations where the fiat on the exchange is less valuable than the Bitcoins, above all after price upswings.

[BUBA363NK]

Most market Hawaii tourism comes from Asia where the use of virtual currency bitcoin as a growing, so it can also affect the number of Asian travelers who come to visit Hawaii tourism.

Use international sites.... bitcoin does not care.

[pretty-g]

They all say Bitcoin cannot be stopped, which of course, we can see in this case, is a complete lie.
If Bitcoin cannot be stopped, then why is Coinbase "stopped" by some regulation

[1Referee]

They all say Bitcoin cannot be stopped, which of course, we can see in this case, is a complete lie.
If Bitcoin cannot be stopped, then why is Coinbase "stopped" by some regulation

Bitcoin as network is unstoppable, obviously. If you purely focus on what governments force exchanges and other services to do, then it's a different thing. It's not that Coinbase is forced to stop, but more that they consider complying with the rules that apply in Hawaii not outweigh the benefits of doing so. The only easy way to deal with the situation then is to simply halt their operations there.

[jamespx]

Most market Hawaii tourism comes from Asia where the use of virtual currency bitcoin as a growing, so it can also affect the number of Asian travelers who come to visit Hawaii tourism.

Use international sites.... bitcoin does not care.

That's right! Bitcoin is freedom!
I say f**k `em!

Me and my friend have transferred our BTCs from Coinbase to Paxful
and we are trading there for now while we find a 2nd site to trade in.

[Netnox]

These government authority people are idiots. They don't know that it is impossible to ban Bitcoin. How can you ban a digital asset? If it was a physical asset, then it was somewhat possible. Now just wait and see what the Hawaiian Coinbase users are going to do. They will get around the ban easily.

[TraderTimm]

Local governments will likely change their tune when they realize they are missing out on a new revenue stream.

Like anything, money makes the world go around.