Following recent inquiries from businesses operating in Pennsylvania, the State’s Department of Banking and Securities (DoBS) have announced that crypto exchange operators do not require a money transmitting license to offer their services to residents.
The department disclosed the clarification on Wednesday in a document titled - Money Transmitter Act Guidance for Virtual Currency Businesses. A primary focus of the legislative piece was how the Money Transmitter Act (MTA) does not apply to cryptocurrency exchanges, especially on the issue of licensing.
For one thing, the DoBS asserts that Bitcoin and other cryptocurrencies which the crypto exchanges directly deal with is not “money” or a legal tender as stated in the MTA.
The act defines money as “currency or legal tender or any other product that is generally recognized as a medium of exchange” while local state laws explain money to be one that the U.S or “a domestic or foreign government” accepts.
The department thus acknowledged that crypto exchanges are not money transmitters because “no jurisdiction in the United States has designated virtual currency as legal tender.” Also, the exchanges do not directly deal with fiat currency but receive payments through a user’s bank account.
In a nutshell, the banks are the money transmitters and not the exchanges which only transact virtual currency settlements for the users.
The paper also clarified that other cryptocurrency related businesses in Pennsylvania such as Bitcoin ATMs, Kiosk and vending machines are not money transmitters. It explained that,
“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 new clarifications will likely allow crypto-related businesses to flourish in the state, with the knowledge that they are not violating any government laws.
Meanwhile, with regards to Bitcoin not having a legal tender status in the U.S, we reported last week that Wyoming legislators had proposed a bill which will place Bitcoin and other decentralized cryptocurrencies in the same category as money.