Legislators in Washington state have put the finishing touches on new rules for businesses that offer digital currency services.
Senate Bill 5031, public records show, has cleared both chambers of the state’s legislature, setting it up to be sent to the office of Governor Jay Inslee. The bill was first introduced in January, clearing its first vote the following month.
While not guaranteed to be signed, the broad support the bill attracted signals that it may pass.
Still, its contents could lead some digital currency-focused startups to think twice about operating in the state – and in the past year, several firms have already pulled out, citing a difficult regulatory environment.
The bill represents an update to the state’s existing money transmission laws, in order to make them account for firms that handle digital currencies.
According to the text of the measure, businesses would be required to maintain reserves – denominated in the relevant digital currency – equal to the funds they retain on behalf of their customers.
The bill states:
“A licensee transmitting virtual currencies must hold like-kind virtual currencies of the same volume as that held by the licensee but which is obligated to consumers in lieu of the permissible investments required in of this subsection.”
Other requirements include mandatory third-party cybersecurity audits of “all electronic information and data systems”, the text reads.
Even absent the new legislation, the past months have shown that some startups working with the tech have moved to steer clear of the state. These include digital currency exchanges Bitfinex, Bitstamp and Poloniex, the latter of which moved to exit Washington just last week.
According to an email circulating on social media and dated 8th April, Poloniex said that it would be suspending services to customers in the state after 21st April.
The full text of the bill can be found below:
5031-S.PL by CoinDesk on Scribd
Washington State Capitol, Olympia, WA via Shutterstock