crypto laws in US

MTA Laws Not Applicable to Crypto Exchanges in Pennsylvania

The Department of Banking and Securities in the State of Pennsylvania has announced that digital currency exchanges based in the state do not need Money Transmission Business Licenses.

Pennsylvania’s DoBS has clarified in a memo titled ‘Money Transmitter Act Guidance for Virtual Currencies’ that the Money Transmitter Act is not applicable to exchanges dealing in virtual currencies.

The memo elaborated on the definitions incorporated into the Money Transmitter Act to shed light on when a Money Transmission Business License is required as well as what constitutes money.

As per the memo, digital currencies are not considered legal tender in the State of Pennsylvania, therefore, businesses dealing in cryptos such as crypto exchanges do not need to obtain MTA License.

Also highlighted in the memo was the case of online crypto exchanges which allow customers to make deposits in fiat currency. It was noted that since these platforms do not handle fiat directly, hence they are not considered Money Transmitters. The memo reads,

“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.”

The Department of Banking and Securities said that the clarification on cryptocurrency exchanges comes in the light of questions raised by the stakeholders.

Interestingly, back in 2016, Pennsylvania had defined digital currency as money for the MTA laws by passing the HB 850. However, the bill was amended later to remove cryptocurrency from the ambit of laws governing money.

The recent announcement by Pennsylvania’s DoBS comes after the State of Texas released a similar statement. As we had reported on January 5, 2019, the Texas Department of Banking released a document that emphasized that most transactions which involve cryptocurrencies will not be considered to be transfers having any monetary value.

However, it is to be noted that the regulators in Texas had classified some transactions in crypto to be governed by the money transmission rules. These classifications included the exchange of crypto for fiat through either a Bitcoin ATM or a crypto exchange.