State of Pennsylvania Clarifies Crypto Exchanges Cannot Be Considered Money Transmitters
The Department of Banking and Securities of the American state of Pennsylvania has recently decided for a statement that can be very good for the crypto industry. According to the state department, cryptocurrency exchanges cannot be considered money transmitters and, therefore, they do not need a special license to operate within the boundaries of the state.
This new decision was published today, January 23, and it follows a number of inquiries that local crypto businesses that made to the state regulator. The decision was made because cryptos are not considered real “money” like fiat currency is, according to the Money Transmission Business Licensing Law and the Money Transmitter Act of Pennsylvania.
Only fiat or any kind of money that is officially emitted by the U. S. government can be considered money according to these two laws, so virtual currency is off the legal tender and the exchanges do not need to obtain a license in order to work.
In the case of the companies that transmit money, according to the act, they do need the license in order to operate in the state of Pennsylvania. What makes crypto exchanges exempt of doing it is the fact that they never actually conduct bank transactions using fiat. What money they use is all via bank accounts, which are directly operated by third-party banking groups.
Luckily for the industry, other businesses in the sector such as Bitcoin ATMs, crypto kiosks and vending machines were also not considered money transmitters, according to the state law. The department has affirmed that even in one-way and two-way kiosks, there are no direct money transfers and that they are merely exchanges for digital assets.
A Three Year Delay
Most of the people commemorating Pennsylvania’s acknowledgment that these companies do not need special licenses do not know, but the process has been in the works for a long time. January 2016 was the first time that the government was sought in order to define how crypto business would work locally.
At the moment, the department did not answer and the final definition was delayed around three years, which was a quite long wait.