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Comment by thinkcomp | Hacker News Reader

Untrue. It's standard for money transmitters to obtain surety bonds, but never have I seen a 100% reserve requirement flat out.

That being said, given Bitcoin's history, I don't think Wyoming's interpretation is unreasonable.

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California requires 100% reserves up to $7 million.[1] For a real "money transmitter", this isn't a big deal, because money stays in their system for about a day, often less. For Coinbase, which is trying to be a broker on a money transmitter license, it's a problem. They hold customer assets for long periods.

Coinbase ought to register with the SEC as a broker/dealer. That would free them from state regulation. Then their customers would have SIPC insurance. Of course, Coinbase would have to accept FINRA audits and regulation. Right now, they don't even publish financial statements.

[1] http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&gr...

That's not what it says, and that's not any of the sections where it says it. §2037(e) says you need a surety bond.

http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&gr...

Surety bonds are not 1:1 reserves.

CA Fin. Code sec. 2037(e): "A licensee that engages in receiving money for transmission shall maintain securities on deposit or a bond of a surety company in an amount greater than the average daily outstanding obligations for money received for transmission in California, provided that such amount shall not be less than two hundred fifty thousand dollars ($250,000) nor more than seven million dollars ($7,000,000)."

A surety bond is an insurance policy good for the full amount of the bond. A bonding company[2] will have a lot of questions to ask a Bitcoin business before taking on that risk.

[1] http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&gr... [2] https://suretygroup.com/surety-bond/money-transmitter-bond

So if I put 1m Bitcoin in my CB wallet, CB should have to match it with $250m? That seems rather unreasonable to me.

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