Pennsylvania Says Cryptocurrency Exchanges Aren’t ‘Money Transmitters’
The Pennsylvania Department of Banking and Securities (DoBS) has announced that cryptocurrency exchanges operating in the state aren’t money transmitters. The permissive guidance comes after several crypto companies had asked the department about licensing rules.
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DoBS: If You’re Not Handling Fiat as a Third Party, You’re Not a Money Transmitter Here
In an advisory issued to address “multiple inquiries” from cryptocurrency exchanges, the DoBS has announced that such platforms, as well as crypto ATMs and kiosks, are not considered money transmitters under Pennsylvania state law.
The guidance, which hinges on the DoBS’s view that “only fiat is … ‘money’ in Pennsylvania,” is a permissive one, as it means these cryptocurrency enterprises now have one less regulatorily-stringent licensing hoop to jump through in their operations.
“Under the [Money Transmitter Act], these Platforms are not money transmitters,” the DoBS said in their bulletin.
“The Platforms, while never directly handling fiat currency, transact virtual currency settlements for the users and facilitate the change in ownership of virtual currencies for the users. There is no transferring money from a user to another user or 3rd party, and the Platform is not engaged in the business of providing payment services or money transfer services.”
The state’s top banking department also explained that cryptocurrency ATMs and vending kiosks were similarly exempt from money transmitter licensing requirements.
“In both the one-way and two-way Kiosk systems, there is no transfer of money to any third party,” the DoBS said.
“The user of the Kiosk merely exchanges fiat currency for virtual currency and vice versa, and there is no money transmission. Thus, the entities operating the Kiosks would not be money transmitters under the MTA.”
How About Some Federal Guidance?
Two bipartisan members of the Congressional Blockchain Caucus introduced H.R.528, formerly known as the Blockchain Regulatory Certainty Act, to the House of Representatives this month.
The bill has a long way to go to pass into law, but if it did eventually actualize on the books, the legislation would exempt blockchain developers and services from having to register as money transmitters in all 50 U.S. states.
The draft bill will spend its inaugural days in the House Banking Committee and the House Judiciary Committee, where provisions or revisions may be added.
Could New York’s BitLicense Be Revised?
When it comes to unpopular licensing in America’s nook of the cryptoverse, New York’s slow and inefficient BitLicense system is safely positioned at the top of the list.
But on the news that New York is creating a new cryptocurrency task force, non-profit cryptocurrency research center Coin Center has urged the body to consider reevaluating the system.
“As any cryptocurrency entrepreneur will tell you, getting a BitLicense is difficult and costly,” Coin Center’s communications director Neeraj Agrawal said at the time.
“Not only that, but as written the regulation has grey areas relating to custody, requires state approval before a company can add new products or services, and very few licenses have been issued.”
Whether this urging will be heard out or fall on deaf ears remains to be seen. U.S. cryptocurrency exchanges will certainly hope change is coming, while the regulators are more likely to be conservative in any changes they make.
What’s your take? Does America need federal crypto rules to avoid a patchwork regulatory mess? Let us know in the comments section below.
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