As the Federal response to cryptocurrency remains stalled, states like Pennsylvania and Wyoming are making their own moves with crypto regulation. And though this approach will most certainly yield a patchwork series of laws and interpretations of laws, it does produce intriguing insights into potential solutions to crypto regulation issues.
One such conclusion was reached earlier today by the Pennsylvania Department of Banking and Securities, which – following three years of delays and numerous inquiries from businesses – produced a clarification regarding the Money Transmission Business Licensing Law, a.k.a. the Money Transmitter Act of Pennsylvania.
According to the DoBS report this law does not apply to crypto-related businesses such as platforms used for the trading of virtual currencies and BTC ATMs.
Pennsylvania is right on the money
In an unusually brief, to-the-point and well-structured report, the DoBS was kind enough to provide a detailed definition of money – as set forth by the MTA – as well as an explanation concerning the conclusions drawn and the guidance offered.
The phrase “[a] medium of exchange currently authorized or adopted by a domestic or foreign government” carries the most significance. By itself, it makes it perfectly clear why BTC and its ilk do not make the cut in their current form – since obviously, no cryptocurrency has been designated as legal tender by any US or foreign state.
From that stems the obvious: since they are not involved in the business of transmitting fiat currency – as defined by the MTA – virtual currency trading platforms are not subject to money transmission licensing requirements, and can therefore freely operate in the state.
Furthermore, according to the report, vending machines and virtual currency kiosks (whether one-way or two-way) are not money transmitters either.
Not all states agree with Pennsylvania’s definition of “money”
Wyoming lawmakers have recently passed a handful of bills – much-praised by the crypto community – which have effectively lifted crypto onto equal footings with fiat currencies.
Home to a budding crypto revolution, Wyoming has been turned into fertile ground for blockchain technology in general, and – according to those involved – more crypto-friendly legislation is to follow.
But while Pennsylvania’s decision is generally cast as positive news by the media, crypto enthusiasts may need to consider it a double-edged sword. Granted, on one hand, it makes it easier/cheaper for crypto businesses to operate in the state; on the other though, it pushes the recognition of crypto as real money into an uncertain future.
We haven’t seen the last of this debate: at the federal level, FinCEN has already made it clear that it considered fully-fledged money transmitters to be all crypto business entities involved in the transaction of ICO-derived tokens.
Cryptocurrency regulation is officially on the move in the US, and though the steps it is currently taking are merely baby ones, that is cause for celebration for most crypto enthusiasts.
The author is invested in digital assets.