Alabama Cryptocurrency Laws
Alabama Monetary Transmission Act, 8-7a-1 to 8-7a-27
“Money” – A medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.
“Money Transmitter” Definition
“Money Transmission” – Selling or issuing payment instruments, stored value, or receiving money or monetary value for transmission. The term does not include the provision solely of delivery, online or telecommunications services, or network access.
“Monetary Value” – A medium of exchange, including virtual or fiat currencies, whether or not redeemable in money.
“Payment Instrument” – A check, draft, money order, traveler’s check, or other means utilized for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit voucher, letter of credit, or instrument that is redeemable by the issuer in goods and services.
This chapter does not apply to any of the following.
(1) The United States or a department, agency, or instrumentality thereof.
(2) The transmission of money by the United States Postal Service or by a contractor on behalf of the United States Postal Service.
(3) A state, county, city, or any other governmental agency or governmental subdivision of a state.
(4) Electronic funds transfer of governmental benefits for a federal, state, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or a state governmental subdivision, agency, or instrumentality thereof.
(5) A board of trade designated as a contract market under the federal Commodity Exchange Act, 7 U.S.C. Sections 1-25 (1994), or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board.
(6) A registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant.
(7) A bank, bank holding company, office of an international banking corporation, or a branch of a foreign bank, provided that such international banking corporation or foreign bank is subject to regulation significantly similar to United States or state chartered banks and deposits are insured.
Sections 8-7A-5 to 8-7A-15, inclusive, shall not apply to any of the following persons:
(1) A person that provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from such registration granted under the federal securities laws.
(2) An operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among persons excluded by this section, in connection with wire transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearing house transfers, or similar funds transfers.
(3) A person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as such a broker-dealer.
(4) Any person collecting, forwarding, or submitting payments to the state, a state agency, board, or commission, a quasi-governmental agency, or to persons in state custody, provided the person does all of the following: a. Operates in this state exclusively for such purpose; b. Has entered into a binding contract with the governmental entity or entities to provide money transmittal services to third parties; c. Files a notice with the commission identifying all governmental agencies for who the person has contracted to provide money transmittal services; d. Has an independent audit performed on a yearly basis; e. Immediately notifies the commission if any financial or other condition arises which would compromise the person’s ability to perform the services for which the person has contracted; f. Maintains a segregated account or accounts for the deposit and transmittal of third-party payments which will not be comingled with any other funds; g. Upon request, makes its books and records available for examination by the commission.
$500 Filing Fee
$500 License Fee
Bond and Insurance Requirements
a. A licensee shall maintain a surety bond, letter of credit, or other similar security in an amount, determined by rule or order of the commission, sufficient to secure faithful performance of the obligation of the licensee with respect to money transmission in Alabama.
b. Security must be in a form satisfactory to the commission and payable to the commission for the benefit of any claimant against the licensee.
c. A claimant against a licensee may maintain an action on the bond, or the commission may maintain an action on behalf of the claimant.
d. A surety bond must cover claims for a minimum of five years after the licensee ceases to provide money transmission services in this state. The surety bond may be reduced or eliminated, at the discretion of the commission, to the extent the amount of the licensee’s outstanding payment instruments and stored-value obligations are less than the surety bond coverage.
e. The commission has discretion to accept other forms of security in lieu of the bond.
f. In no event shall the bond be set at an amount less than one hundred thousand dollars ($100,000), or the average daily outstanding obligations for money received for transmission in Alabama plus 50 percent of the average daily outstanding payment instrument and stored value obligations in Alabama, whichever is greater.
g. The commission may increase the amount of security required to a maximum of five million dollars ($5,000,000) if the financial condition of a licensee so requires, as evidenced by reduction of net worth, financial losses, or other relevant criteria.
A licensee under this chapter shall maintain a net worth of at least twenty-five thousand dollars ($25,000) determined in accordance with generally accepted accounting principles.
Money Transmission License Required for Crypto Exchange?
State Comments or Statements
The definition of “monetary value” in this state includes “virtual or fiat currencies, whether or not redeemable in money.” This change was included in SB 173/HB215, effective August 1, 2017, which replaced Alabama’s Sale of Checks Act.