Bitfinex, a Hong Kong-based bitcoin exchange, has stopped offering services to customers in the state of Washington.
First revealed on Reddit by a user who claimed to have received a message on their BFX account that Bitfinex could no longer offer them services since they are in Washington State. The Reddit poster noted they had not received an email from Bitfinex and were given one day to withdraw funds.
Bitfinex did not post any information on its website about the matter.
Money Transmitters License Needed
The exchange decided not to pursue a money transmitters license for the state of Washington, following several months of discussions with the state’s department of financial institutions, according to the notice. The state will not allow the company to offer its services without such a license.
Customers were given until March 1 to withdraw funds, according to the notice.
“We apologize for any inconvenience in this matter,” it said.
According to the Washington State Department of Financial Institutions (DFI) website, digital currency is “a medium of exchange not authorized or adopted by a government.” It is included in the definition of “money transmission” in the state’s Uniform Money Services Act (UMSA), chapter 19.230 RCW.
DFI has worked with payment system providers to develop regulatory standards and practices within existing law, the department noted. It works to protect businesses and consumers without unnecessarily impeding the growth of new technologies that can improve payments systems or create alternative ones.
License Not Always Needed
Not all bitcoin exchanges or service providers need to obtain a money transmitter license under UMSA.
Companies wishing to send money to Washington residents in digital currency can contact the DFI to determine if licensure under UMSA is required.
Bitfinex is registered as a money services business with the Financial Crimes Enforcement Network (FINCEN) in all states, which regulates digital currency, under the name, BFXNA Inc., according to the FINCEN website.
Bitfinex is not licensed with the U.S. Commodities Futures Trading Commission (CFTC).
In June, the CFTC ordered Bitfinex to pay $75,000 for offering illegal off-exchange financed retail commodity transactions in bitcoin and other cryptocurrencies, and for failing to register as a Futures Commission Merchant as required by the Commodity Exchange Act.
Luxembourg-based bitcoin exchange Bitstamp announced last year it would cease to serve Washington customers due to regulatory constraints. The exchange did not provide any clear reason regarding the regulations that forced its decision.
Image from Shutterstock.
Last modified: March 4, 2021 4:54 PM