Cryptocurrency exchange Poloniex has decided to suspend activity for New Hampshire customers on account of the state’s cryptocurrency regulations, according to a notice posted on the exchange’s website.
New Hampshire customers will be instructed by email on how to suspend their accounts. They will have until October 6 to open and close orders and withdraw funds.
The state’s 2016 law for licensing money transmitters covers virtual currency.
“Convertible virtual currency,” according to a state court website, means a digital representation of value that: a) Can be a medium of exchange, a unit of account, and/or a store of value; b) Has an equivalent value in real currency or acts as a substitute for real currency; c) May be centralized or decentralized; and d) Can be exchanged for currency or other convertible virtual currency.
Under the law’s definitions section, “monetary value” means a medium of exchange, whether or not redeemable in currency, and includes convertible virtual currency.
“Money transmitter” means a person engaged in the business of money transmission.
Under the 2016 law, a nonrefundable application fee of $500 is required for each license application. Within 30 days from the start of money transmission activity for the licensee at each authorized delegate location, a fee of $25 will be paid to the department for each authorized delegate registration, up to a total maximum annual fee of $5,000 for all locations.
Each money transmitter applicant must post a continuous surety bond in the amount of $100,000. The surety bond is for the benefit of any person who is damaged by any violation of this chapter and is conditioned upon the licensee’s compliance with the licensing provisions.
An applicant or licensee must maintain a net worth of the lesser of its average daily outstanding money transmissions for the prior calendar year or $1 million.
Poloniex noted that its email to New Hampshire customers includes information about managing open margin positions for residents who have existing positions. These residents will not be able to open new margin positions or lend funds.
New Hampshire customers who cannot meet the deadline for withdrawing funds will be able to do so by contacting Poloniex support. While accounts will be suspended, the data will remain on file. When Poloniex resumes operations in New Hampshire, customers will be able to log into their accounts with remaining balances intact.
Poloniex noted it is working with the state’s banking department and other regulatory agencies to verify changes in laws that apply to Poloniex’s services and seek licenses when needed. Poloniex indicated the New Hampshire suspension is intended to be temporary.
“This is a nascent industry; as the regulations around it mature, these types of service disruptions may not be entirely avoidable, but we have been and will continue to be proactive in educating regulators and monitoring both existing laws and upcoming changes to these laws so that we can limit interruptions wherever possible,” the statement noted.
Under the licensing of money transmitters section of the New Hampshire law, the state established in June of this year a commission to study cryptocurrency regulation, according to a state court website.
The commission will include three members of the house of representatives, the banking commissioner, or designee, the director of the bureau of securities regulation or designee, and one representative of the cryptocurrency industry, appointed by the governor.
The commission will study whether regulation of the cryptocurrency industry is required in New Hampshire.
The commission will annually report its findings and any recommendations for proposed legislation to legislators, the governor and the state library on or before November 1.
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