The California Department of Business Oversight has warned consumers that Coinbase’s recently launched bitcoin exchange is neither regulated nor licensed in the state. Commissioner Jan Lynn Owen said:
“Numerous press accounts about Coinbase’s Jan. 26 launch of Coinbase Exchange erroneously reported the Exchange has received regulatory approval from the State of California. The California Department of Business Oversight has not decided whether to regulate virtual currency transactions, or the businesses that arrange such transactions, under the state’s Money Transmission Act. California consumers should be aware Coinbase Exchange is not regulated or licensed by the State.”
When it launched two days ago, the headlines in numerous media reports indicated that it was the first regulated exchange in the US. Indeed, Coinbase did the same. Its blog post title read: “Coinbase Launches First Regulated Bitcoin Exchange in the U.S.” The claim seems to be a departure from Coinbase’s normally conservative approach to things, as was its “To the Moon” countdown.
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Part of the basis for the claim was its support for USD wallets in 24 states, some of which has granted Coinbase a license, and others not requiring one. In California, rules have yet to be determined, so while Coinbase’s activities are not illegal, they have not received a formal blessing either.
Effective this year, the state repealed an outdated law requiring that commerce only be carried out with US currency.
In the US, there have already been numerous bitcoin exchanges operating for some time. In areas where money services licensing is not an issue, these exchanges are no less licensed than Coinbase. In all cases, they are not “regulated” since regulation does not yet exist.
The planned bitcoin exchange by Winklevoss Capital, in contrast, is waiting for formal regulation to arrive before launching.