The Pennsylvania Department of Banking and Securities (DoBS) today clarified that cryptocurrency exchanges and business do not need a money transmission license to operate in the state.
DoBS published the guidance after a series of inquiries by the crypto-related businesses.
According to the department, Bitcoin and other digital assets do not fall under the category of ‘money,’ and thus the state’s Money Transmission Business Licensing Law or the Money Transmitter Act are not applicable on the businesses dealing in cryptocurrencies.
“The MTA defines ‘money’ as ‘currency or legal tender or any other product that is generally recognized as a medium of exchange.’ Additionally, Pennsylvania law has defined money as ‘lawful money of the United States’ and a medium of exchange currently authorized or adopted by a domestic or foreign government,” DoBS noted.
The act specifically mentions only fiat currency as ‘money’ and United States government does not consider Bitcoin or any other cryptocurrency as fiat currency.
“Thus, only fiat currency, or currency issued by the United States government, is ‘money’ in Pennsylvania. Virtual currency, including Bitcoin, is not considered ‘money’ under the MTA. To date, no jurisdiction in the United States has designated virtual currency as legal tender,” it added.
Bitcoin: Can it Hit 100k in 2021?Go to article >>
The DoBS further clarified that the license is needed only if any person or a business is “transmitting money by means of a transmittal instrument for a fee.” In the case of crypto exchanges, the fiat currency is handled by the banks and not the exchange itself. So these businesses do not need a money transmission license.
Moreover, the department also exempted cryptocurrency kiosks, ATMs, and vending machines from the list of money transmitters.
“In both the one-way and two-way Kiosk systems, there is no transfer of money to any third party. The user of the Kiosk merely exchanges fiat currency for virtual currency and vice versa, and there is no money transmission,” the department added.
Crypto in the US
The status of Bitcoin and other cryptocurrencies can be confusing in the United States as there are many discrepancies between federal and state laws. Though none of the digital assets are considered as legal tender, Bitcoin and Ethereum are categorized as commodities in the country.
The confusion arises with the token offerings, as according to the Securities and Exchange Commission, most of them fall under the category of securities.
Last month, two legislators moved a bipartisan bill in the Congress to exclude all digital assets from age-old securities laws.