There was already plenty of uncertainty and confusion surrounding bitcoin before this week’s development that saw Silicon Valley’s Coinbase proclaim it has launched the first U.S. exchange for the virtual currency’s traders regulated in at least 24 states, including the company’s home state, California.
The problem: California regulators say it has not issued any licenses for digital currency exchanges. That means it hasn’t done so for Coinbase, arguably the most prominent and heavily-funded bitcoin services company.
At this point, however, Coinbase is not doing anything wrong. The disagreement between the company and the California Department of Business Oversight is just one more example of the virtual currency’s grey area when it comes to real-world regulations and policies.
“It’s not that if they operate in California, they’re breaking the law, but it’s important that consumers be aware that the Coinbase exchange is not regulated or licensed in California,” said Tom Dresslar, a spokesman for the Department of Business Oversight (DBO).
The DBO said in an official statement that it “has not decided whether to regulate virtual currency transactions, or the businesses that arrange such transactions, under the state’s Money Transmission Act.”
Regulators go on to say that “California consumers should be aware Coinbase Exchange is not regulated or licensed by the State.”
Coinbase continues to operate as a bitcoin exchange, apparently not fully sanctioned but also not violating any existing laws either.
Here’s how Coinbase puts it on its website:
“The USD wallet is only available to Coinbase customers located in US states where Coinbase is either licensed to engage in money transmission or where it has determined that no such license is currently required. If you do not see the USD Wallet in your account, then you may be located outside of the states we currently support.”
Coinbase currently lists 25 states where it’s operations are “supported,” including California. A Coinbase representative told CoinDesk that New York and California are currently “working on their own bitcoin regulations”, and that they exist in a regulatory “grey zone” regarding bitcoin.
The spokesperson also said that Coinbase is in contact with applicable agencies about the exchange, including California’s DBO.