A U.S state has quoted its own laws to make it clear that virtual currency exchanges are not bound by the money laws governing other businesses offering money transfer services involving fiat.
The State of Pennsylvania published a document with details on why virtual currency exchanges are not guided by the Money Transmitter Act.
According to the document, virtual currency exchanges:
Never directly handle fiat currency; any fiat currency paid by or to a user is maintained in a bank account in the Platforms’ [virtual currency exchanges] name at a depository institution.
Although the Money Transmitter Act and the state’s Department of Banking and Securities (DoBS) requires a license when “transmitting money by means of a transmittal instrument”, the document clarified that:
Under the MTA, these platforms [virtual currency exchanges] are not money transmitters. The platforms, while never directly handling fiat currency, transact virtual currency settlements for users and facilitate the change in ownership of virtual currencies for the users. There is no transferring money from a user to another user or 3rd party.
More than virtual currency exchanges, the document continued to note that other cryptocurrency-focused businesses like operating a crypto ATM or a crypto kiosk are also not required to seek a money transmitting license for the same reason that they do not directly handle fiat.
Under Pennsylvania’s MTA, money is defined as legal tender, lawful money of the U.S, or a medium of exchange. Seeing that the state has not defined crypto in any of these brackets, then offering crypto-related services do not attract adherence to the MTA.
The document did not make any reference to initial coin offerings (ICOs)
Do you think virtual currency exchanges across the United States should be exempted from money transmission laws since no state has recognized crypto as legal tender?
Let us know your thoughts in the comments section below.