US: Pennsylvania Rules That Crypto Exchanges, ATMs Are Not Money Transmitters

The American state of Pennsylvania has clarified that cryptocurrency exchanges do not fall subject to the Money Transmitter Act (MTA), according to a Department of Banking and Securities (DoBS) document published today, Jan. 23.

The document clarifies crypto exchanges thus do not require a license to offer their services to Pennsylvania residents. The MTA — otherwise referred to as the Money Transmission Business Licensing Law — provides that “[n]o person shall engage in the business of transmitting money by means of a transmittal instrument for a fee or other consideration with or on behalf of an individual without first having obtained a license from the [DoBS].”

While the definition of a “person” pertains to both individuals and organizations, the DoBs underscores that the transmission of money under the MTA necessarily involves the transfer of fiat currency “with or on behalf of an individual to a 3rd party” — a service for which the transmitter charges a fee.

According to the document, digital currencies such as Bitcoin (BTC) are not deemed to be “money” under the MTA — which is defined as being “currency or legal tender or any other product that is generally recognized as a medium of exchange.”

According to the DoBs, no United States jurisdiction has recognized cryptocurrencies as legal tender to date. Pennsylvania in particular restricts the definition of money to “[a] medium of exchange currently authorized or adopted by a domestic or foreign government.”

The document also clarifies that in regard to crypto kiosks, ATMs and vending machines — regardless of whether they enable one-or two-way deposits and exchange of crypto and fiat — no money transmission is deemed to be involved, as there is no transfer of money to a third party.

As reported last week, a bill that exempts companies providing non-custodial crypto services from certain state money transmitting laws was recently re-submitted to the U.S. Congress.

In March of last year, the state of Wyoming preempted any prospective national level amendments by passing its own bill to exempt particular blockchain-based tokens from certain securities and money transmission laws.