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...