These five states are the most crypto unfriendly places in the U.S.
What makes a good (or bad) U.S. state for a crypto investor? Are you looking for strong investor protections? Or do you want more freedom to invest in whichever cryptocurrency token you want? Does your state have any Bitcoin (BTC) ATMs or other crypto-friendly infrastructure?
We’ve looked at a number of factors, including which states have the strictest crypto rules and where interest in cryptocurrency is high or low, to see which U.S. states are best and worst for crypto investors. Here are five states that stand out as being the worst for cryptocurrency.
1. New York
It’s fair to say that New York has a love-hate relationship with cryptocurrency. Its incoming mayor Eric Adams wants the state to “go big” on crypto and it has its own coin called NewYork Coin. The financial capital of the U.S. has hosted a number of big crypto conferences in recent years, and Bloomberg’s analysis shows it also ranks well for the number of crypto hires this year.
However, New York’s crypto regulation is some of the harshest in the country. For example, New Yorkers can’t actually mine NewYork Coin due to the heavy controls. Cryptocurrency exchanges need a BitLicense to operate in the state, and companies say getting that approval can be costly and overly burdensome. Plus, the New York Attorney General’s office is particularly forceful when it comes to pursuing bad actors.
Now, you could argue that calling out Tether (USDT) for failing to keep enough money in reserve to support the coins it issued is a good thing. Tether is a stablecoin that’s backed by U.S. dollars, but an investigation by the NYAG found this was not always the case. Attorney General Letitia James said, “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.”
On the flip side, only around 30 crypto organizations are able to operate in New York, and many coins can’t be traded there. New York also only has 181 crypto ATMs for a population of 19 million, another negative in terms of crypto-friendliness.
Hawaii introduced a rule in 2016 that said crypto platforms needed to have equivalent cash on hand to back the crypto bought by Hawaii residents. As a result, well-known exchanges like Coinbase and Robinhood do not sell cryptocurrency there.
However, in August 2020, the state followed up with a two-year pilot program that allowed some exchanges to operate and exempted them from this rule. Following the success of the pilot, Iris Ikeda, Commissioner of Financial Institutions at Hawaii Department of Commerce and Consumer Affairs, said that she is working on new, more friendly, crypto regulation.
Hawaii and New York made it onto our worst crypto states because of their heavy regulation. In contrast, Vermont does not have a lot of crypto specific bills. What’s interesting is that it doesn’t have any crypto ATMs either. In fact, it doesn’t have much interest in cryptocurrencies at all.
Crypto Head’s research into crypto-ready states puts Vermont close to the bottom. It’s the only state with no Bitcoin ATMs. In terms of online crypto-related Google searches, it had just 514 crypto-related searches per 100,000 people between July 2020 and June 2021. In contrast, that figure is 977 in top-ranked California.
Alaska is at the bottom of Crypto Head’s list of crypto ready states. When the research was published, it had just six crypto ATMs in total and 588 crypto-related internet searches per 100,000 people.
That said, at the start of December, Coinme opened 15 Coinstar kiosks in Alaska grocery stores. Alaskans can now buy Bitcoin at Carrs and Safeway stores in cities such as Anchorage, Fairbanks, and Juneau. Alaska is also considering using blockchain technology to improve voting security in elections.
5. West Virginia
With 349 Google crypto searches per 100,000 people in a year, West Virginia seems to have the lowest interest in crypto in the U.S. However, it tops the charts in terms of crypto ATMs. West Virginia has 336 crypto ATMs, which equates to 18.7 per 100,000 people.
Interestingly, West Virginia almost banned crypto altogether earlier this year. While making a major overhaul to its criminal code, the original version included two paragraphs making it a misdemeanor to trade or use cryptocurrencies. This text was removed at the last minute following questions from CoinDesk.
State-level crypto regulation matters
Crypto regulation has been an increasingly thorny topic this year as authorities around the world consider how best to control this sprawling industry. In the U.S., leading crypto execs recently addressed Congress as lawmakers consider what shape increased regulation should take.
Right now, several bodies are involved in overseeing the crypto market. But a lot of the regulation happens at a state level — and the list above shows that some states have much stricter rules for crypto investors than others.
Having some level of regulation at a state level can build investor confidence and help cryptocurrency adoption. But a careful balance is needed. Heavy handed regulation can push out smaller crypto platforms and limit investor choice.