- DoBs says crypto exchanges are exempt from MTA
- They can license only entities handling fiat cash in Pennsylvania
- Other states seem to have gone ahead of Pennsylvania
The Pennsylvania state’s Department of Banking Services (DoBs) has issued a clarification on the applicability of the Money Transmitter Act (MTA). This has resulted from an increasing number of inquiries by entities interested in different kinds of digital currencies.
According to a communique titled “Money Transmitter Act Guidance for Virtual Currency Businesses,” the agency has stated that the Money Transmitter Act (MTA) cannot be applied to cryptocurrency exchanges. DoBs said it has had to give the guidelines published on Wednesday, January 23, 2019, following an increase of inquiries from crypto-related businesses.
The clarifications have focused on giving clear definitions covered by the MTA, which explain what is defined as money and when one requires the MTA License. As per the memo, cryptocurrencies don’t qualify to be called legal tender and, as a result, businesses that are involved in their transfer do not qualify to receive an MTA license.
The act, according to the statement, only recognizes fiat currency or any other United States’ government-issued currencies as money. The statement clarified:
“To date, no jurisdiction in the United States has designated virtual currency as legal tender.”
Crypto exchanges Don’t Qualify for MTA
The memo emphasized that any entity involved in the business of transmitting money must receive a license if they are involved in transmitting fiat currency and, are therefore expected to charge a fee for the service. DoBs says since cryptocurrency exchanges don’t handle fiat currency directly and their transactions are conducted via bank accounts, they don’t qualify to be money transmitters that require to be licensed. Regarding those web-based cryptocurrency exchanges that allow customers to make fiat deposits, the statement said:
“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.”
In contrast to what’s happening in Pennsylvania, lawmakers introduced two bills to give cryptocurrencies that same status as money; the bill proposes to clarify digital assets into digital securities, digital assets, and virtual currencies.
New York is Steps Ahead
New York State set up a task force on January 2, 2019, under the Digital Cryptocurrency Study Bill to help in studying and providing detailed information about blockchain technology and cryptocurrencies.
The members of the task force will include Stakeholders like technologists, consumers, institutional and small investors, large and small Blockchain enterprises and academics. On November 14, 2018, The New York State Department of Financial Services gave a Bitlicense to NYDIG to conduct cryptocurrency business in the state.