South Dakota Cryptocurrency Laws

Relevant Statute

South Dakota Codified Laws; Chapter 51A-17 – Money Transmission

“Money Transmitter” Definition

“Money transmission,” engagement in the business of the sale or issuance of payment instruments or stored value or of receiving money or monetary value for transmission to a location within or outside the United States by any means, including wire, facsimile, or electronic transfer. 51A-17-1

Additional Definitions

“Monetary value,” any medium of exchange, whether or not redeemable in money. “Payment instrument,” any electronic or written check, draft, money order, travelers check, or other electronic or written instrument or order for the transmission or payment of money, sold or issued to one or more persons, whether or not such instrument is negotiable. The term, payment instrument, does not include any credit card voucher, any letter of credit, or any instrument which is redeemable by the issuer in goods or services. 51A-17-1

Exemptions

Entities exempt from chapter. This chapter does not apply to: (1) The United States or any department, agency, or instrumentality thereof; (2) The United States Post Office; (3) The state or any political subdivisions thereof; (4) Banks, bank holding companies, credit unions, building and loan associations, savings and loan associations, savings banks, or mutual banks organized under the laws of any state or the United States, and any subcontractor, agent, or independent contractor that sells payment instruments issued by any such entity or sells such entity’s money transmission services on behalf of such entity; and (5) The provision of electronic transfer of government benefits for any federal, state, or county governmental agency as defined in Federal Reserve Board Regulation E, by a contractor for and on behalf of the United States or any department, agency, or instrumentality thereof, or any state or any political subdivisions thereof. 51A-17-3

Registration Fees

$500 Application Fee $1,000 License Fee

Bond and Insurance Requirements

Security device or deposit required. Each application shall be accompanied by a security device acceptable to the director in the amount of one hundred thousand dollars. The director may increase the amount of the security device to a maximum of five hundred thousand dollars upon the basis of the impaired financial condition of a licensee, as evidenced by a reduction in net worth, financial losses, or other relevant criteria. The security device shall be in a form satisfactory to the director and shall run to the state for the benefit of any claimants against the licensee to secure the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission, and payment of money in connection with the sale and issuance of payment instruments or the transmission of money, or both. In the case of a surety bond, the aggregate liability of the surety may not exceed the principal sum of the bond. Any claimant against the licensee may bring suit directly on the security device or the director may bring suit on behalf of any claimant, either in one action or in successive actions. 51A-17-8

Bond Alternatives and Additional Insurance Requirements

In lieu of a security device or of any portion of the principal thereof, as required by this section, the licensee may deposit with the director, or with such banks in this state as the licensee may designate and the director may approve, cash, interest-bearing stocks and bonds, notes, debentures, or other obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States, or of this state, or of a city, county, school district, or instrumentality of this state, or guaranteed by this state, to an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the security device or portion thereof. The securities or cash shall be deposited as provided in this section and held to secure the same obligations as would the security device, but the depositor is entitled to receive all interest and dividends thereon, has the right, with the approval of the director, to substitute other securities for those deposited, and shall be required so to do on written order of the director made for good cause shown. 51A-17-8

Capital Requirements

Minimum net worth required. Each licensee under this chapter shall at all times have a net worth of not less than one hundred thousand dollars, calculated in accordance with generally accepted accounting principles. 51A-17-6

Money Transmission License Required for Crypto Exchange?

Yes

State Comments or Statements

The money transmission definition includes the concept of monetary value, which is defined as a “medium of exchange, whether or not redeemable in money”.