Exclusive Interview: Virtual Currency Licenses Protect Public Says Washington DFI

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One of the biggest stumbling blocks cryptocurrency projects that are based in or deal with America have has been unclear legislation and rules. To make things worse, each state in the US has it’s own unique set of laws. Some states have even chosen to require crypto businesses to get licenses such, as the infamous New York “Bit License”.


With so many questions unanswered, we decided to reach out to the Washington State Department of Financial Institutions, or DFI, which is responsible for issuing licenses for cryptocurrency companies. Join us as we have a chat with Charles Clark, Agency Deputy Director & Director of Consumer Services of the Washington State DFI.

Charles Clark

Charles Clark, Image from dfi.wa.Gov

Our Exclusive Interview with Charles Clark, Washington DFI

Robert DeVoe, What is your general opinion on cryptocurrencies like bitcoin? Does the DFI or Washington State have a positive, negative, or neutral stance on them?

Charles Clark, Washington State DFI: While we do not endorse any company, product or investment, we want innovative companies to do business here in Washington. As a result, our stance is neutral as to specific cryptocurrencies, but we strive to provide clarity as to how innovative companies utilizing cryptocurrencies can do business here in compliance with our money transmitter laws. We are willing to sit down with start-up companies and talk about our licensing requirement. We also work hard to promptly review new applications for licensure so that companies can get their product or service to market.

This agency regulates money transmission under the state’s Uniform Money Services Act, chapter 19.230 RCW and chapter 208-690 WAC. Virtual currency regulation falls under that act. We became familiar with virtual currency business models several years ago. We created interim guidance to clarify that the existing law regulated the activities that were being conducted. With extensive input from industry we amended the statute in part to codify the interim guidance. We then recently amended the rules implementing the law to further clarify the law.

Robert: What is the main goal of Washington State requiring certain companies and groups to register?

Charles: Licensing business activities accomplishes a number of goals. One is consumer protection. By requiring background checks on officers and owners, ensuring adequate net worth and bonding, and examining companies for compliance with the law, including compliance with anti-money laundering laws, the public is better protected. Licensure also helps ensure confidence in the public that those providing financial services are operating in compliance with the law. Licensure also helps create a level playing field among businesses with the same or similar business models or same activities.

“…Washington is committed to providing clarity on how companies can successfully operate in compliance with our law.”

Robert: The United States has been arguably falling behind on the cryptocurrency trend, with many start up companies choosing to avoid dealing with the US altogether due to unclear federal laws, and inconsistent laws state to state. Do you feel 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 transmitter licensure for companies utilizing virtual currency in money transmission activities. However, state money transmitter statutes were often adopted prior to the creation of crypto currencies. In Washington, with recent amendments to our money transmitter law, we merely provided clarity on how innovative companies can operate in Washington in compliance with our older money transmitter law.

We cannot speak for other states, but Washington is committed to providing clarity on how companies can successfully operate in compliance with our law. On a national level, we are also committed to doing our part to help streamline state licensure. Specifically, we are leading a multi-state effort to streamline money transmitter state licensure through our MSB Licensing Agreement with other states. Currently 18 states have signed the Agreement. Here is some more information on the agreement.

Robert: In layman’s terms, what are some of the differences between the infamous New York “bit license” and what Washington State is requiring?

Charles: New York created an entirely new type of license to regulate virtual currencies. As with many other states, Washington’s existing law already covered money transmission utilizing virtual currency. Washington simply made some amendments to the existing law to provide clarification and more detail around how a virtual currency company can operate in compliance with the money transmitter law.

“These minimum licensing requirements are in place to protect the public.”

Robert: Currently, only a small handful of big companies have been able to secure the necessary license for Washington State. Some of those examples include billion-dollar companies like Coinbase, Square, and the exchange known as Bittrex. Do current licensing requirements stifle or inhibit smaller players from getting licensed? With so many companies getting involved in cryptocurrency, why have only so few been able to secure this license? Have many companies been rejected?

Charles: Our first virtual currency licensee was a very small company, where both owners had other full-time jobs 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 large companies. In our experience, many companies choose to avoid regulation. Other companies, however, may not have the financial wherewithal or for some other reason are not able to meet licensing requirements. These minimum licensing requirements are in place to protect the public.

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

“Some companies have complained about the law’s requirements, and some companies have been positive about the requirements.”

Robert: If an average Washington State citizen is against the state imposing registration requirements on start up companies, what should they do to have their voices heard?

Charles: They may contact their elected representatives at the Washington Legislature.

Robert: What has the feedback from cryptocurrency companies been to the state? Have they expressed any concern that current requirements are too difficult to meet, or has there been positive feedback?

Charles: We had extensive stakeholder input during our amendments to the act and during rulemaking. Some companies have complained about the law’s requirements, and some companies have been positive about the requirements. The positive feedback has been that companies appreciate the clarity that has been provided in Washington, which has allowed companies to move forward knowing that they are in compliance with Washington law.

Final Thoughts

The good news is that at least for Washington State, the DFI is willing to answer questions and provide some much needed clarity. The bad news is that licensing requirements, while designed to protect consumers, can still stop smaller innovators from being able to get licensed.

Regardless, our thanks go out to Mr. Charles Clark and the team at the DFI for responding to our request for an interview.


Robert is News Editor at Blockonomi. A true believer in the freedom, privacy, and independence of the future digital economy, he has been involved in the cryptocurrency scene for years. Contact

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