North Carolina Cryptocurrency Laws

Relevant Statute

Article 16B. Money Transmitters Act. § 53-208.41

“Money Transmitter” Definition

Money transmission. – To engage in the business of any of the following: a. Sale or issuance of payment instruments or stored value primarily for personal, family, or household purposes; or b. Receiving money or monetary value for transmission or holding funds incidental to transmission within the United States or to locations abroad by any and all means, including payment instrument, stored value, wire, facsimile, or electronic transfer, primarily for personal, family, or household purposes. This includes maintaining control of virtual currency on behalf of others. 53-208.42

Additional Definitions

Payment instrument. – A check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any other instrument that is redeemable by the issuer exclusively in goods or services. Monetary value. – A medium of exchange, whether or not redeemable in money. Virtual currency. – A digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account, or a store of value but only to the extent defined as stored value under subdivision (19) of this section, but does not have legal tender status as recognized by the United States Government. 53-208.42

Exemptions

Payment instrument. – A check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any other instrument that is redeemable by the issuer exclusively in goods or services. Monetary value. – A medium of exchange, whether or not redeemable in money. Virtual currency. – A digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account, or a store of value but only to the extent defined as stored value under subdivision (19) of this section, but does not have legal tender status as recognized by the United States Government. 53-208.42

Registration Fees

$1,500 Application Fee

Bond and Insurance Requirements

(a) Applicants shall be required to post a surety bond with the Commissioner at application and licensees shall maintain a surety bond in the amount of one hundred fifty thousand dollars ($150,000) to be subsequently adjusted as set forth in subsection (b) of this section. (b) The surety bond amount required subsequent to initial licensure shall consist of a base amount of one hundred fifty thousand dollars ($150,000) for money transmission volumes in this State of no more than one million dollars ($1,000,000). However, if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of one million dollars ($1,000,000) but less than five million dollars ($5,000,000), then the licensee’s bond amount shall be one hundred seventy five thousand dollars ($175,000); if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of five million dollars ($5,000,000) but less than ten million dollars ($10,000,000), then the licensee’s bond amount shall be two hundred thousand dollars ($200,000); if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of ten million dollars ($10,000,000) but less than fifty million dollars ($50,000,000), then the licensee’s bond amount shall be two hundred twenty-five thousand dollars ($225,000); and if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of fifty million dollars ($50,000,000), then the licensee’s bond amount shall be two hundred fifty thousand dollars ($250,000). 53-208.47

Bond Alternatives and Additional Insurance Requirements

(f) In lieu of a surety bond, the licensee may deposit with the Commissioner, or with any bank in this State designated by the licensee and approved by the Commissioner, an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the surety bond or portion thereof, the following: (1) Unencumbered cash. (2) Unencumbered interest-bearing bonds. (3) Unencumbered notes. (4) Unencumbered debentures. (5) Unencumbered obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States. (6) Unencumbered obligations of this State or of any political subdivision of the State, or guaranteed by this State. The securities or cash shall be deposited as aforesaid and held to secure the same obligations as would the surety bond, but the depositor shall be entitled to receive all interest and dividends thereon, shall have the right, with the approval of the Commissioner, to substitute other securities for those deposited, and shall be required to do so on written order of the Commissioner made for good cause shown. 53-208.47

Capital Requirements

(a) An applicant shall possess and a licensee shall maintain at all times a net worth of not less than two hundred fifty thousand dollars ($250,000) calculated in accordance with generally accepted accounting principles. (b) The Commissioner may by order increase the amount of net worth required of an applicant or licensee if the Commissioner determines additional net worth is necessary to ensure safe and sound operation based on consideration of the following factors: (1) The nature and volume of the projected or established business. (2) The number of locations at or through which money transmission is or will be conducted. (3) The amount, nature, quality, and liquidity of assets. (4) The amount and nature of liabilities. (5) The history of operations and prospects for earning and retaining income. (6) The quality of operations and management. (7) The nature and quality of controlling persons. (8) The history of compliance with applicable State and federal law. (9) Any other factors the Commissioner deems relevant. 53-208.46

Money Transmission License Required for Crypto Exchange?

Yes

State Comments or Statements

Added virtual currency to its Money Transmitter Act in 2016. Added statute in June 2018 that allows exchanges to count virtual currencies they hold in custody towards their reserves: https://www.ncleg.net/Sessions/2017/Bills/House/PDF/H86v3.pdf

Relevant Statute

Article 16B. Money Transmitters Act. § 53-208.41

“Money Transmitter” Definition

Money transmission. – To engage in the business of any of the following: a. Sale or issuance of payment instruments or stored value primarily for personal, family, or household purposes; or b. Receiving money or monetary value for transmission or holding funds incidental to transmission within the United States or to locations abroad by any and all means, including payment instrument, stored value, wire, facsimile, or electronic transfer, primarily for personal, family, or household purposes. This includes maintaining control of virtual currency on behalf of others. 53-208.42

Additional Definitions

Payment instrument. – A check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any other instrument that is redeemable by the issuer exclusively in goods or services. Monetary value. – A medium of exchange, whether or not redeemable in money. Virtual currency. – A digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account, or a store of value but only to the extent defined as stored value under subdivision (19) of this section, but does not have legal tender status as recognized by the United States Government. 53-208.42

Exemptions

Payment instrument. – A check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any other instrument that is redeemable by the issuer exclusively in goods or services. Monetary value. – A medium of exchange, whether or not redeemable in money. Virtual currency. – A digital representation of value that can be digitally traded and functions as a medium of exchange, a unit of account, or a store of value but only to the extent defined as stored value under subdivision (19) of this section, but does not have legal tender status as recognized by the United States Government. 53-208.42

Registration Fees

$1,500 Application Fee

Bond and Insurance Requirements

(a) Applicants shall be required to post a surety bond with the Commissioner at application and licensees shall maintain a surety bond in the amount of one hundred fifty thousand dollars ($150,000) to be subsequently adjusted as set forth in subsection (b) of this section. (b) The surety bond amount required subsequent to initial licensure shall consist of a base amount of one hundred fifty thousand dollars ($150,000) for money transmission volumes in this State of no more than one million dollars ($1,000,000). However, if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of one million dollars ($1,000,000) but less than five million dollars ($5,000,000), then the licensee’s bond amount shall be one hundred seventy five thousand dollars ($175,000); if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of five million dollars ($5,000,000) but less than ten million dollars ($10,000,000), then the licensee’s bond amount shall be two hundred thousand dollars ($200,000); if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of ten million dollars ($10,000,000) but less than fifty million dollars ($50,000,000), then the licensee’s bond amount shall be two hundred twenty-five thousand dollars ($225,000); and if a licensee has transmission volume in North Carolina in a 12-month period ending December 31 in excess of fifty million dollars ($50,000,000), then the licensee’s bond amount shall be two hundred fifty thousand dollars ($250,000). 53-208.47

Bond Alternatives and Additional Insurance Requirements

(f) In lieu of a surety bond, the licensee may deposit with the Commissioner, or with any bank in this State designated by the licensee and approved by the Commissioner, an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the surety bond or portion thereof, the following: (1) Unencumbered cash. (2) Unencumbered interest-bearing bonds. (3) Unencumbered notes. (4) Unencumbered debentures. (5) Unencumbered obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States. (6) Unencumbered obligations of this State or of any political subdivision of the State, or guaranteed by this State. The securities or cash shall be deposited as aforesaid and held to secure the same obligations as would the surety bond, but the depositor shall be entitled to receive all interest and dividends thereon, shall have the right, with the approval of the Commissioner, to substitute other securities for those deposited, and shall be required to do so on written order of the Commissioner made for good cause shown. 53-208.47

Capital Requirements

(a) An applicant shall possess and a licensee shall maintain at all times a net worth of not less than two hundred fifty thousand dollars ($250,000) calculated in accordance with generally accepted accounting principles. (b) The Commissioner may by order increase the amount of net worth required of an applicant or licensee if the Commissioner determines additional net worth is necessary to ensure safe and sound operation based on consideration of the following factors: (1) The nature and volume of the projected or established business. (2) The number of locations at or through which money transmission is or will be conducted. (3) The amount, nature, quality, and liquidity of assets. (4) The amount and nature of liabilities. (5) The history of operations and prospects for earning and retaining income. (6) The quality of operations and management. (7) The nature and quality of controlling persons. (8) The history of compliance with applicable State and federal law. (9) Any other factors the Commissioner deems relevant. 53-208.46

Money Transmission License Required for Crypto Exchange?

Yes

State Comments or Statements

Added virtual currency to its Money Transmitter Act in 2016. Added statute in June 2018 that allows exchanges to count virtual currencies they hold in custody towards their reserves: https://www.ncleg.net/Sessions/2017/Bills/House/PDF/H86v3.pdf