Prominent Bitcoin and Ethereum exchange and wallet Coinbase announced that it is forced to stop supporting customers in Hawaii due to an “impractical” and “untenable” regulatory policy.Citing the reason for indefinitely suspending its business in Hawaii, Coinbase revealed:The Hawaii Division of Financial Institutions (DFI) has communicated regulatory policies which we believe will render continued Coinbase operations there impractical.Coinbase was first notified of the restrictive regulatory policy by the DFI in September, one that makes it “impossible” for the exchange to operate in the state, according to a member of Coinbase’s legal team.Fundamentally, the regulation demands Coinbase or other digital currency operators to hold cash reserves equivalent to the value of the digital currency held for customers.
They arenot using S&L technology, they are a facilitator, like a telephone exchange. Hawaii is trying toleap out ahead on the bureaucrat race to master sandbox regulation. Moving up in the regulatory world by mastering the new money technology.
But, in the sandbocx we see that regulations are a bit different. The default situation is complete autotrade and no thumbprint to regulate except the end points,. What are the 'leaves; of the sandbox? Smart cards.
My smart card, in my right hand, is an exchange and my thumb print owns the coins, inside the card. The regulators want to protect my thumbprint from my smart card, so do I (and visa versa) . In the sandbox we have red/green; a mathematical requirement. The easiest way to regulate a pit is to require bots to limit red/green excursions. That is a workable regulation, but all the cards will know its a regulated site.