Virtual currency licenses protect public Dice Washington DFI

One of the biggest obstacles to cryptocurrency projects that are based or have to do with America were unclear laws and rules. To make matters worse, every state in the United States has its own set of unique laws. Some states have even chosen to require cryptographic companies to obtain licenses such as the notorious "Bit License" in New York.

With so many unanswered questions, we decided to contact the Department of Financial Institutions in Washington. , or DFI, which is responsible for issuing licenses for cryptocurrency companies. Join us as we chat with Charles Clark, Assistant Director of the Agency and Director of Consumer Services in Washington State DFI.

Charles Clark, Image of dfi.wa.Gov

Our exclusive interview with Charles Clark, Washington DFI

Robert DeVoe, Blockonomi.com: What is your overall opinion on cryptocurrencies like bitcoin? Do the DFI or the State of Washington have a positive, negative or neutral position on them?

Charles Clark, DFI of the State of Washington: Even if we do not support any company, product or investment, we want innovative companies to do business here in Washington. As a result, our position is neutral to specific cryptocurrencies, but we strive to provide clarity on how innovative companies using cryptocurrencies can do business here in accordance with our money transmitter laws. We are willing to sit down with start-ups and talk about our licensing requirements. In addition, we work hard to promptly review new licensure applications so that companies can market their product or service.

This agency regulates the transmission of money under the Uniform Money Services Act, Chapter 19.230 RCW and Chapter 208-690 WAC. The regulation of virtual currency is part of this act. We became familiar with the virtual currency business models several years ago. We have created an intermediate guide to clarify that the existing law regulated the activities that were carried out. With a large contribution from the industry we have modified the statute partly to codify the provisional orientation. We have therefore recently amended the law enforcement rules to further clarify the law.

Robert: What is the main goal of the State of Washington that requires the registration of certain companies and groups?

Charles: Licensing business activities reaches a number of goals. One is consumer protection. By requiring in-depth controls to officials and owners, ensuring adequate equity and net constraints, and examining companies for compliance with the law, including compliance with anti-money laundering laws, the public is better protected. The licensing also helps to ensure public confidence that those who provide financial services operate in compliance with the law. The granting of licenses also helps to create a level playing field between companies with the same or similar business models or the same activities.

"… Washington is committed to providing clarity on how companies can operate successfully in accordance with our law."

Robert: The United States was probably back in the cryptocurrency trend, with many startups choosing to avoid dealing with the United States altogether due to unclear federal laws, and inconsistent state laws to been. Do you think that requiring companies to register is a deterrent to growth and innovation, or is it purely an attempt to protect consumers?

Charles: Many states require money transfer licenses for companies that use virtual currency in money transmission activities. However, the statute of the state coin transmitter was often adopted before the creation of the crypto currencies. In Washington, with recent changes to our money transmitter law, we simply provided clarity on how innovative companies can operate in Washington in accordance with our old money transmitter law.

We can not speak for other states, but Washington is committed to providing clarity on how companies can operate successfully in accordance with our law. At the national level, we are also committed to doing our part to help simplify state licensure. Specifically, we are conducting a multi-state effort to simplify the licensure of the money transmitter status through our MSB license agreement with other states. Currently, 18 states have signed the agreement. Here is some more information on the agreement.

Robert: Put simply, what are some of the differences between the infamous "bit license" in New York and what the Washington state is asking for?

Charles: New York has created a completely new type of license to regulate virtual currencies. As in many other states, Washington's existing law already covered the transmission of money using virtual currency. Washington has simply made some amendments to the existing law to provide clarification and more details on how a virtual currency company can operate in accordance with the money transmitter law.

"These minimum licensing requirements are in place to protect the public." [19659013] Robert: Currently, only a small handful of large companies have been able to obtain the necessary license for the State of Washington. Some of these examples include billions of dollars companies like Coinbase, Square and the exchange known as Bittrex. Do the current licensing requirements prevent or prevent smaller players from obtaining a license? With so many companies involved in cryptocurrency, why only so few have been able to protect this license? Many companies have been rejected?

Charles: Our first virtual money licensee was a very small company, where both owners had other jobs full time and had an idea for a new business model. That company is now flourishing and growing under our regulation. Some of our other virtual currency licensees are not big companies. In our experience, many companies choose to avoid regulation. However, other companies may not have the necessary financial means or for other reasons may not be able to meet the licensing requirements. These minimum licensing requirements are in place to protect the public.

We rarely refuse companies or deny licenses. Rather, we are committed to openly discussing licensing requirements with our applicants. When a company contacts us to inquire about licenses and if we determine that the company will not be able to meet licensing requirements, we will discuss it with the company, and it is more likely that an application will not be archived. If an application has been filed, the company will often withdraw its application if it finds that it is unable to meet the requirements.

"Some companies have complained about the requirements of the law and some companies have been positive about the requirements."

Robert: If an average citizen of Washington State is opposed to the state that imposes registration requirements on start-ups, what should they do to make their voices heard?

Charles: They can contact their elected representatives at the Washington legislature.

Robert: What was the status of the cryptocurrency companies? Have they expressed concern that current needs are too difficult to meet, or that there has been positive feedback?

Charles: We have had a broad involvement of stakeholders during our amendments to and during regulation. Some companies have complained about the requirements of the law and some companies have been positive about the requirements. The positive feedback was that companies appreciate the clarity that has been provided in Washington, which has allowed companies to move forward knowing they are compliant with Washington law.

Final considerations

The good news is that at least for Washington State, the DFI is willing to answer questions and provide much needed clarity. The bad news is that licensing requirements, while designed to protect consumers, can still prevent smaller innovators from obtaining a license.

In any case, our thanks go to Charles Clark and the DFI team to answer our request for an interview.