Pennsylvania Cryptocurrency Laws
MONEY TRANSMISSION BUSINESS LICENSING LAW Act of Nov. 3, 2016, P.L. 1002, No. 129
“Money” means currency or legal tender or any other product that is generally recognized as a medium of exchange.
“Money Transmitter” Definition
“Transmittal instrument” means any check, draft, money order, personal money order, debit card, stored value card, electronic transfer or other method for the payment of money or transmittal of credit, other than a merchandise gift certificate or instrument with a similar purpose sold in the regular course of business by a vendor of personal property or services in a closed loop system or hybrid closed loop system. Section 1
“Closed loop system” means a system in which an entity issues a transmittal instrument which can be used at various physical or virtual locations of that entity. “Hybrid closed loop system” means a system in which an entity issues a transmittal instrument which may be used at a limited number of establishments or entities which have a common bond to the issuing entity and in which the establishments or entities have a written agreement to honor the transmittal instrument. “Stored value” means money or monetary value in a digital electronic format, stored or capable of storage on an electronic medium in such a manner as to be retrievable and transferable electronically. Section 1
No license shall be required for any of the following: (1) Banks, bank and trust companies, credit unions, savings banks and private banks organized under the laws of this Commonwealth; similar banking institutions organized under the laws of the United States or of any other state which are insured by the Federal Deposit Insurance Corporation; similar credit unions organized under the laws of the United States or another state, and insured by the National Credit Union Share Insurance Fund; and savings and loan associations and building and loan associations organized under the laws of another state or of the United States; or their agents. (2) Agents of a person licensed under this act. (3) Agents of a Federal, State or local government agency, to the extent that such agents are disbursing government benefits. (4) Agents that receive payments from individuals on behalf of persons that are creditors, public utilities or providers of goods or services. Section 3
$5,000 License/Registration Feea
Bond and Insurance Requirements
(a) Each application for a license shall be accompanied by: (3) a bond in the penal sum of one million dollars ($1,000,000) executed by a surety company authorized to transact business within the Commonwealth of Pennsylvania or securities as provided in the following subsection. The bond shall run to the Commonwealth of Pennsylvania and shall be for the use of the Commonwealth and of any person or persons who may have a cause of action against the licensee for failure to carry out the terms of any transmittal instrument which the licensee shall have issued and who were residents of the Commonwealth of Pennsylvania at the time the cause of action arose. The condition of the bond shall be that the licensee will comply with and abide by the provisions of this act and the rules and regulations of the department lawfully promulgated under this act and that the licensee will pay to the Commonwealth, to the department or to any other person any moneys that may become due from the licensee to the Commonwealth or to the department or to any other person under the provisions of this act or of any transmittal instrument issued by the licensee within this Commonwealth and who were residents of the Commonwealth of Pennsylvania at the time the cause of action arose. If any person shall be aggrieved by the misconduct of any licensee, he may upon recovering judgment against such licensee, issue execution under such judgment and maintain an action upon the bond of the licensee in any court having jurisdiction of the amount claimed, provided the department assents thereto. Section 6
(a) To qualify for a license an applicant shall: (1) have a tangible net worth of at least five hundred thousand dollars ($500,000) Section 4
Money Transmission License Required for Crypto Exchange?
State Comments or Statements
Colorado released interim regulatory guidance on September 20, 2018 which states that the Colorado Money Transmitters Act “aims to regulate the transmision of money, meaning legal tender, and as noted, cryptocurrencies are not recognized as legal tender. The direct transmission of cryptocurrency between two consumers is not subject to licensure under the Act. With respect to transactions that involve a third party, the complete absense of fiat currency from a transmission from one consumer to another is not a money transmission. Conversely, the presence of fiat currency during a transmission may be subject to licensure under the Act. State licensure would be required when: (1) A person is engaged in the business of selling and buying cryptocurrencies for fiat currency; and (2) A colorado customer can transfer cryptocurrency to another customer within the exchange; and (3)The exchange has the ability to transfer fiat currency throug the medium of cryptocurrency.” *See next column for link to interim guidance* Colorado has introduced multiple bills, including HB18-1220 which would require persons dealing in cryptocurrency to be regulated under the laws regulating money transmitters. The Bill status is “Lost”. https://leg.colorado.gov/bills/hb18-1220 Conflicting bill exemtping virtual currency from the money transmitters act, HB 1426, also under “Lost” status. https://leg.colorado.gov/bills/hb18-1426