Bitcoin Exchanges Don’t Need Money Transmitter Licenses in Pennsylvania

The Pennsylvania Department of Banking and Securities (DoBS) says cryptocurrency exchanges in the state do not require Money Transmission Business Licenses.

MTA Not Applicable to Bitcoin in Pennsylvania

In a memo titled “Money Transmitter Act Guidance for Virtual Currency Businesses,” the Pennsylvania DoBS clarified that the Money Transmitter Act (MTA) did not apply to cryptocurrency exchanges.

The clarification focused on the precise definitions encompassed in the MTA, which focused on what constitutes money and when is an MTA license required. According to the memo, cryptocurrencies do not constitute legal tender. Thus, businesses involved in the transfer of cryptos do not need to obtain an MTA.

Furthermore, Section two of the MTA explicitly mentions the transfer of money for a fee or other form of consideration. Since cryptocurrencies do not constitute money, the Pennsylvania DoBS says businesses involved in transmitting virtual currencies need not obtain an MTA.

The memo even highlighted web-based exchanges where customers might make fiat deposits, saying:

These Platforms never directly handle fiat currency; any fiat currency paid by or to a user is maintained in a bank account in the Platform’s name at a depository institution. Under the MTA, these Platforms are not money transmitters. 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.

According to the memo, the Pennsylvania DoBS say the clarification was necessary to answer lingering questions from stakeholders.

Back in 2016, Pennsylvania passed the HB 850, which defined cryptocurrency as money for the state’s MTA laws. However, the House Commerce Committee amended the bill to remove the cryptocurrency as money definition.

Cryptocurrency Does Not Constitute Money

This recent statement from Pennsylvania regulators is similar to a memo released by regulators in Texas. At the start of the year, the Texas Department of Banking issued an update to its MTA guidelines stating that exchange platforms didn’t require a license to conduct cryptocurrency transactions.

However, unlike in Pennsylvania, Texas regulators issued some broad-based statements that classified a couple of cryptocurrency transactions as money transmission. These include the exchange of cryptocurrency for fiat via an exchange platform or Bitcoin ATM.

Other states like New Hampshire have also enacted laws excluding cryptocurrency transactions from money transmission laws. Meanwhile, places like New York, North Carolina, and Oregon among others either have their specialty cryptocurrency business regulations (for example, BitLicense) or generally classify them as money transmitters.

Should cryptocurrency be classified as money? Let us know your thoughts in the comments below.

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