Ohio Cryptocurrency Laws

Relevant Statute

Ohio Money Transmitter Act, Ohio Revised Code Section 1315.03

“Money Transmitter” Definition

“Transmit money” means to receive, directly or indirectly and by any means, money or its equivalent from a person and to deliver, pay, or make accessible, by any means, method, manner, or device, whether or not a payment instrument is used, the money received or its equivalent to the same or another person, at the same or another time, and at the same or another place, but does not include transactions in which the recipient of the money or its equivalent is the principal or authorized representative of the principal in a transaction for which the money or its equivalent is received, other than the transmission of money or its equivalent. “Transmit money” also includes the sale of checks and other payment instruments. 1315.01

Exemptions

(A) No person, regardless of the location of that person, its facilities, or its agents, shall receive, directly or indirectly and by any means, money or its equivalent for transmission from a person located in this state, unless that person receiving the money or its equivalent for transmission is a licensee, an authorized delegate of a licensee that is not itself required to be licensed under division (B) of this section, or is one of the following: (1) The United States or any department, agency, or instrumentality of the United States; (2) The United States postal service; (3) A state of the United States or any political subdivision of a state of the United States; (4) A bank, credit union, savings and loan association, savings association, or savings bank organized under the laws of the United States or any state of the United States or doing business under a license granted under Chapter 1119. of the Revised Code, a subsidiary or affiliate of a bank, savings and loan association, or savings bank, a credit union service organization, or an authorized representative of any of these; (5) A contractor providing electronic transfer of government benefits on behalf of the United States or any department, agency, or instrumentality of the United States or on behalf of any state or any political subdivision of any state of the United States; (6) A person the only money transmitter activity of which is to deliver payroll money on behalf of employers to employees by check or deposit in a checking or savings account at a bank, savings bank, savings and loan association, savings association, or credit union; (7) A person the only money transmitter activity of which is to accept prepayment for future purchases of that person’s goods or services that are other than money transmitter services; (8) A licensed securities, insurance, mortgage, or real estate broker or agent acting within the scope of its license; (9) A person the only money transmitter activity of which is receiving money or its equivalent as an intermediary facilitating the closing of a sale of property or a loan; (10) A retail seller of goods and services the only money transmitter activities of which are receipt of money or its equivalent from and to be delivered at the direction of an obligor on a credit card account for a credit card to be used solely for purchases from that retail seller or branded with the name of that retail seller or an affiliate of that retail seller; (11) A person, the regulation of money transmitter activities under sections 1315.01 to 1315.18 of the Revised Code of which, the superintendent of financial institutions determines would not serve the intended purposes of the regulation. 1315.02

Registration Fees

$5,00 Application Fee

Bond and Insurance Requirements

(A)(1) In a form satisfactory to the superintendent of financial institutions, each licensee shall provide and maintain a security device of one or more of the types described in division (B) of this section of not less than three hundred thousand dollars or such greater amount as the superintendent finds appropriate but, except pursuant to a supervisory action, not exceeding two million dollars. (2) By control agreement or terms of the bond, the security device described in division (A)(1) of this section shall run to the superintendent for the benefit of any claimants against the licensee, to secure the faithful performance of the obligations of the licensee with respect to its receipt of money from persons in this state for transmission. In the case of a bond, the superintendent may bring suit on behalf of claimants, either in one action or in successive actions, or may authorize claimants to bring their own actions on the bond. (B) The security device required by division (A) of this section shall be one or more of the following: (1) A pledge, with a holder acceptable to the superintendent and subject to a control agreement with the superintendent, of any of the following: (a) Cash; (b) Interest-bearing stocks, bonds, notes, debentures, or other obligations of the United States or any agency or instrumentality of the United States, or guaranteed by the United States; (c) Interest bearing stocks, bonds, notes, debentures, or other obligations of this state, or of a city, county, town, village, school district, or instrumentality of this state, or guaranteed by this state. (2) A surety bond; (3) Any other security device approved by the superintendent. 1315.07

Bond Alternatives and Additional Insurance Requirements

(C)(1) (a) In the case of a security device provided in the form of a pledge of securities, the securities pledged shall be valued at the lower of principal amount or market value. (b) The licensee is entitled to receive all interest and dividends on cash or securities pledged and, with the approval of the superintendent, may substitute pledged securities, which substitution also may be ordered by the superintendent pursuant to a written order. 1315.07

Capital Requirements

(C) The superintendent shall not approve an application described in division (A)(1) of this section if the applicant does not meet both of the following requirements: (1) The applicant is a legally established business entity that is capitalized separately and distinctly from every other legal entity and is qualified to do business in this state. (2) The applicant has a minimum net worth of not less than five hundred thousand dollars, calculated according to generally accepted accounting principles, but excluding any assets that the superintendent disqualifies and including any off-balance sheet liabilities that the superintendent requires. 1315.04 (a) Subject to division (A)(2) of this section, each licensee shall maintain permissible investments described in division (B) of this section having an aggregate market value of not less than the aggregate amount of all of the licensee’s outstandings received from persons in the United States, directly and through authorized delegates, to the extent reported to the licensee. (b) For purposes of division (A)(1)(a) of this section, a licensee’s permissible investments, even if commingled with other assets of the licensee, and a licensee’s other assets to the extent necessary to equal the licensee’s outstandings, are, by operation of law, impressed with a trust and held for the benefit of persons the money of which the licensee holds for transmission, and these permissible investments are not available to satisfy any other of the licensee’s creditors. (2) The superintendent of financial institutions may waive the requirement described in division (A)(1)(a) of this section if the volume of a licensee’s outstandings does not exceed the licensee’s security device provided pursuant to section 1315.07 of the Revised Code. 1315.06

State Comments or Statements

Money or payment instrument is not defined. When money is not defined, there is a reasonable assumption that virtual currencies are deemed money or otherwise used as medium of exchange. Until such time that the State or the courts of Ohio opine on this subject matter, we consider this to be a state that would likely require a money transmitter license. However, the Ohio MY Application on NMLS includes the following: “Virtual Currency: If the applicant will engage in the transaction of virtual currency in the course of money transmission activities, provide a current third party security audit of all relevant computer and information systems.”