50-State Review of Cryptocurrency and Blockchain Regulation
By Joseph Jasperse
At the moment, the United States has no federal regulatory framework for digital assets. Below is a summary of what each state has done to regulate cryptocurrency and blockchain technology using its own authorities. What can be found from this report is a general lack of uniformity across state-level digital asset regulation.
Alabama
Cryptocurrency
Cryptocurrency is encompassed in existing money transmission statutes. Ala. Code § 8-7A-2 defines monetary value as “A medium of exchange, including virtual or fiat currencies, whether or not redeemable in money,” and money transmission as “Selling or issuing payment instruments, stored value, or receiving money or monetary value for transmission.” Ala. Code § 8-7A-5 states that “A person may not engage in the business of money transmission” unless they are licensed.
Alaska
Cryptocurrency
Alaska has no cryptocurrency-specific laws, but cryptocurrency is encompassed in existing money transmission statutes. Alaska Stat. § 06.55.990 defines monetary value as “a medium of exchange, whether or not redeemable in money,” and money transmission as “selling or issuing payment instruments or stored value, or receiving money or monetary value for transmission.” AK Stat § 06.55.101 states that “A person may not engage in the business of money transmission…unless the person” is licensed. The Alaska Division of Banking and Securities confirms that this requirement applies to “Companies dealing with fiat and virtual currencies (cryptocurrencies),” stating that such companies must “apply for a money transmitter license” and “enter into a Limited Licensing Agreement (LLA) with the State of Alaska.”
Arizona
Cryptocurrency
Ariz. Rev. Stat. § 6-1201 broadly defines a money transmitter as “a person…who does any of the following: (a) Sells or issues payment instruments; (b) Engages in the business of receiving money for the transmission of or transmitting money; (c) Engages in the business of exchanging payment instruments or money into any form of money or payment instrument; (d) Engages in the business of receiving money for obligors for the purpose of paying that obligor’s bills, invoices or accounts; (e) Meets the definition of a bank, financial agency or financial institution.” Major cryptocurrency exchanges Coinbase, Binance, and Gemini have all registered as money transmitters in Arizona. AZ Rev Stat § 44-1801 and AZ Rev Stat § 44-1844 create a framework under Arizona’s securities laws for “crowdfunding or virtual coin offerings.”
Blockchain
Arizona has three statutes relating to blockchain. AZ Rev Stat § 44-7061 defines blockchain technology and smart contract and states that a signature, record, or contract “that is secured through blockchain technology is considered to be” an electronic signature or record. It also states that “Smart contracts may exist in commerce” and “a person that…uses blockchain technology to secure information that the person owns or has the right to use retains the same rights of ownership or use with respect to that information as before the person secured the information using blockchain technology.” AZ Rev Stat § 11-269.22 states that “A county may not prohibit or otherwise restrict an individual from running a node on blockchain technology in a residence.” AZ Rev Stat § 13-3122 states that “It is unlawful to require a person to use or be subject to electronic firearm tracking technology” where electronic firearm tracking is defined as “a platform, system or device or a group of systems or devices that uses a shared ledger, distributed ledger or blockchain technology.” In 2019, Arizona’s legislature adopted HB 2747 which appropriated “$1,250,000 for distribution to applied research centers that specialize in blockchain technology.”
Pending Legislation
Arizona’s legislature is currently considering several bills relating to cryptocurrencies. HB 2204 (passed by the House on February 23, 2022) clarifies the state taxation of digital assets. SB 1127 would allow state agencies to accept cryptocurrency as a payment for fines, penalties, rent, rates, taxes, fees, charges, revenue, financial obligations, and special assessments from cryptocurrency issuers. SB 1128 and SCR 1014 exempt virtual currency from property tax. SB 1341 defines Bitcoin as legal tender. SB 1383 (sent to the governor on June 8, 2022) includes cryptocurrency in the definition of liquid assets for divorce matters. SB 1493 would allow state agencies to pay their employees in virtual currency if requested by the employees. SCR 1013 defines digital currency as a medium exchange and asserts the right to own digital currency.
Arkansas
Cryptocurrency
Arkansas has no cryptocurrency-specific laws, but cryptocurrency may be encompassed in existing money transmission statutes. AR Code § 23-55-102 defines monetary value as “a medium of exchange, whether or not redeemable in money,” and money transmission as “selling or issuing payment instruments, stored value, or receiving money or monetary value for transmission.” AR Code § 23-55-201 states that “A person may not engage in the business of money transmission…unless the person” is licensed. The Arkansas Securities Department has issued no-action letters to certain digital asset businesses, exempting them from licensing requirements. This includes Mythical, Inc. (June 22, 2020), which issued virtual currency in a video game, and River Financial, Inc. (May 21, 2020), which sold its own Bitcoin inventory.
Blockchain
Arkansas’s Uniform Electronic Transactions Act includes blockchain technology and smart contracts under AR Code § 25-32-122. This statute recognizes signatures, records, and contracts made through blockchain technology as legally valid.
California
Cryptocurrency
California’s Department of Financial Protection and Innovation stated that the Department “has not concluded whether Bitcoin and other cryptocurrencies are a form of money” and thus “has not determined whether exchange services trigger the application of California’s banking or money transmission laws.”[1] As such, digital asset providers are not required to be licensed or supervised, but this determination could change. The Department of Financial Protection and Innovation has provided numerous no-action letters to digital currency businesses. These letters often exempt digital currency ATMs from licensing and have included peer-to-peer transfer businesses. In 2020, a new Consumer Financial Protection Divison was created under the California Department of Financial Protection. Part of this new division’s mandate is to research new financial products including cryptocurrency.
Blockchain
On May 4, 2022, Governor Gavin Newsom signed Executive Order N-9-22 to “to Spur Responsible Web3 Innovation, Grow Jobs, and Protect Consumers.” The order itself does not impose any new regulations. Rather, it calls for further research and engagement on the topic of cryptocurrency and blockchain to eventually create a transparent and protective regulatory framework.
Pending Legislation
California’s legislature is currently considering a few relevant bills. AB 2269 (passed by the Assembly on May 12, 2022) would “prohibit a person from engaging in digital financial asset business activity” unless “the person is licensed or registered with the Department of Financial Protection and Innovation.” AB 2689 allows private and public entities to accept virtual currency as a method of payment. SB 1275 could similarly allow state agencies to accept cryptocurrency as payment.
Colorado
Cryptocurrency
In 2018, Colorado’s Division of Banking issued interim guidance regarding cryptocurrencies. The guidance requires licensing as a money transmitter when “A person is engaged in the business of selling and buying cryptocurrencies for fiat currency; and A Colorado customer can transfer cryptocurrency to another customer within the exchange; and The exchange has the ability to transfer fiat currency through the medium of cryptocurrency.” The 2019 Colorado Digital Token Act exempts individuals dealing with cryptocurrency from certain securities registration requirements, and broker-dealer and salesperson licensing requirements. To satisfy the exemption, businesses must file a notice with the Colorado Securities Commissioner before offering, selling, or transferring cryptocurrency tokens. CO Rev Stat § 38-13-102 states that virtual currency under the Uniform Unclaimed Property Act “does not include…The software or protocols governing the transfer of the digital representation of value.”
Blockchain
CO Rev Stat § 24-37.5-105 states that “in the administration of any new major information technology project, the [O]ffice [of Information Technology]…shall evaluate the potential use of blockchain and distributed ledger technologies as part of the project.” It further states that “The office shall conduct an assessment and bring recommendations for distributed ledger or blockchain implementations to the joint technology committee of the general assembly.”
Pending Legislation
Two bills have been passed by Colorado’s legislature and sent to the governor for signing. HB 1053 mandates the Department of Agriculture to create an online program to educate agriculture producers about blockchain technology. SB 25 would allow the treasurer to sell digital security tokens using blockchain technology for state financing.
Connecticut
Cryptocurrency
CT Gen. Stat. § 36a-596 defines virtual currency as “any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology,” and includes such currency under the definition of money transmission. CT Gen. Stat. § 36a-597 states that “No person shall engage in the business of money transmission in this state…without a main office license issued by the commissioner.” CT Gen. Stat. § 36a-598 requires money transmission businesses seeking a license to declare whether their activities “will include the transmission of monetary value in the form of virtual currency.” CT Gen. Stat. § 36a-600 acknowledges that businesses engaged in the transmission of virtual currency may be denied a license at “the commissioner’s discretion” or face “additional requirements, restrictions or conditions.” CT Gen. Stat. § 36a-602 adds additional surety bond requirements for virtual currency transmitters to account for price volatility. CT Gen. Stat. § 36a-603 requires that non-depository financial institutions “hold virtual currency of the same type and amount owed or obligated to such other person.” Connecticut’s Department of Banking has written multiple opinions solidifying cryptocurrency exchanges as license-requiring money transmitters,[2] but has generally excluded digital currency ATMs from this designation.[3] Connecticut’s governor recently signed two laws relating to cryptocurrencies. HB 5506 (May 7, 2022) and SB 3 (May 10, 2022) require the Board of Regents for Higher Education to develop seminar programs to educate small businesses about electronic commerce and virtual currency.
Blockchain
In 2018, Connecticut’s governor signed into law SB 443, which establishes “a working group to develop a master plan for fostering the expansion of the blockchain industry in the state and recommend policies and state investments to make Connecticut a leader in blockchain technology.” SB 1039 was signed in 2021, and requires “the Department of Administrative Services” to “develop and issue a request for information for the incorporation of blockchain technology to make a state administrative function more efficient or cost-effective.”
Delaware
Cryptocurrency
Delaware has no cryptocurrency-specific laws, but cryptocurrency may be encompassed in existing money transmission statutes. 5 DE Code § 2303 states that “No person…shall…engage in the business of receiving money for transmission or transmitting the same without having first obtained a license hereunder.” However, money transmission is not defined in Delaware law. Major cryptocurrency exchanges Coinbase, Binance, and Gemini have all registered as money transmitters in Delaware.
Blockchain
Delaware allows corporations to maintain their records on a blockchain or blockchain-like technology. 8 DE Code § 224 states that “Any records administered by or on behalf of the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, method, or 1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases).” 8 DE Code § 219 and 8 DE Code § 232 provide rules for the transmission of shareholder notifications when corporate records are stored on an electronic network or a blockchain. SB 194, signed in 2018, amends Delaware’s code to allow blockchain technology to be used by statutory trusts. 12 DE Code § 3801 states that beneficial interest in a statutory trust may be evidenced electronically by “1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases).” 12 DE Code § 3806 states that beneficial owners and trustees may “may vote…by means of electronic transmission” including by use of distributed electronic networks or databases. 12 DE Code § 3819 states that “A statutory trust may maintain its records …by means of…1 or more electronic networks or databases (including 1 or more distributed electronic networks or databases), if such form is capable of conversion into paper form within a reasonable time.” SB 183, which was also signed in 2018, makes similar provisions for LLCs and limited partnerships. SB 89, SB 90, and SB 91 were enacted in 2019, and collectively amend the Delaware Revised Uniform Partnership Act and Delaware Limited Liability Company Act, among other statutes, to allow the use of blockchain technology to maintain certain records and facilitate certain electronic transmissions.
District of Columbia
Cryptocurrency
D.C. has no cryptocurrency-specific statutes, but case law from United States v. Harmon (2021) establishes that cryptocurrency businesses fall under the Money Transmission Act and must register as money transmitters.
Florida
Cryptocurrency
FL Stat § 896.101 includes virtual currency in its definition of monetary instruments. FL Stat § 560.103 defines a money transmitter as an entity that “receives currency, monetary value, or payment instruments for the purpose of transmitting the same by any means.” FL Stat § 560.125 states that “A person may not engage in the business of a money services business or deferred presentment provider in this state unless the person is licensed.” State v. Espinoza (2019) found that this licensing requirement includes those conducting cryptocurrency transactions, even two-party, individual, ones. The deadline to comply with the Espinoza ruling was the last day of 2021. On May 12, 2022, Governor Ron DeSantis signed HB 273 into law, which revises many of Florida’s existing cryptocurrency statutes. The law defines virtual currency under FL Stat § 560.103 and explicitly includes virtual currency transmitters in the scope of FL Stat § 560. It clarifies FL Stat § 560.125 and partially undoes the Espinoza ruling, stating that money transmitter licenses are only required for “intermediaries” that “transmit…virtual currency from one person to another location or person,” and who have “the ability to unilaterally execute or indefinitely prevent a transaction.” Therefore, two-party, individual transactions will no longer require licensing, but major exchanges still will. HB 273 eases restrictions on these exchanges by excluding virtual currency from the definition of payment instrument and regulating exchanges solely under money service business regulations. It also allows exchanges to only hold virtual currency of the same type and amount owed instead of requiring additional cash reserves. The law takes effect on January 1, 2023, and will solidify Florida as a crypto-friendly state. FL Stat § 559.952 establishes a Financial Technology Sandbox “to allow financial technology innovators to test new products and services in a supervised, flexible regulatory sandbox using exceptions to specified general law and waivers of the corresponding rule requirements under defined conditions.” Under this law, developing blockchain or cryptocurrency businesses with sandbox permission are exempt from needing a money transmitter license during the license period and face less regulatory scrutiny.
Blockchain
In 2019, Florida adopted HB 1393 which “establish[ed] the Florida Blockchain Task Force within the [D]epartment [of Financial Services.”
Georgia
Cryptocurrency
GA Code § 7-1-680 defines money transmission as “engaging in the business of receiving money or monetary value for transmission” and virtual currency as “a digital representation of monetary value that does not have legal tender status.” GA Code § 7-1-681 states that “No person…shall engage in…money transmission without having first obtained a license authorizing such activity.” Based on the prior definitions, cryptocurrency transactions fall under this licensing requirement. The Department of Banking and Finance has issued Cease and Desist Orders against unlicensed cryptocurrency platforms, such as with CampBX in 2018. GA Code § 7-1-690 further allows the Department of Banking and Finance “to enact rules and regulations that apply solely to persons engaged in money transmission or the sale of payment instruments involving virtual currency.” GA Code § 53-13-2 defines a digital asset under the Revised Uniform Fiduciary Access to Digital Assets Act as “an electronic record in which an individual has a right or interest. Such term shall not include an underlying asset or liability unless the asset or liability is itself an electronic record.” The Act lays out rules for who can access a person’s digital assets, among other things.
Hawaii
Cryptocurrency
Since June 30, 2020, businesses must get permission from Hawaii’s Digital Currency Innovation Lab to engage in cryptocurrency transactions under a “two-year program to evaluate whether the digital currency industry should be licensed or not.” After this date, legislation is needed “to enable reasonable licensing of this industry or exempt it from licensing.” The pilot project was recently extended another two years to end on June 30, 2022 (HR 115). This came after numerous other bills that attempted to set up a licensing process failed to pass.[4]
Pending Legislation
The legislature recently passed SB 2695 (sent to the governor on May 6, 2022), which would establish a task force for blockchain and cryptocurrency.
Idaho
Cryptocurrency
The Idaho Department of Finance explicitly states that “Virtual Currency Exchangers” are “required to have an Idaho Money Transmitter license.” That being said, the Department has issued numerous no-action letters for businesses selling their own inventory of digital currency, often through digital currency ATMs, which exempts these businesses from licensing requirements. The Department has also exempted businesses where “all exchange margin trading and/or lending is strictly limited to digital assets” and that do “not permit trading in, or allow deposits of, fiat currency.” “The Digital Assets Act was signed into law by Idaho’s governor on March 28. This law categorizes digital assets as intangible personal property and applies existing property laws to such assets.
Illinois
Cryptocurrency
05 ILCS 657, Illinois’ Transmitters of Money Act, is unclear about how digital currencies should be treated. Illinois’ Department of Financial and Professional Regulation released guidance in 2017 stating that: “A person or entity engaged in the transmission of solely digital currencies…would not be required to obtain a [Transmitters of Money Act] license. However, should transmission of digital currencies involve money in a transaction, that transaction may be considered money transmission depending on how the transaction is organized. Any person or entity engaging in a transaction involving both digital currencies and money should request a determination from the Department on whether or not such activity will require a [Transmitters of Money Act] license.” Consequently, the Division of Financial Institutions has issued numerous non-binding statements to advise cryptocurrency businesses whether they must be licensed. In 2019 Illinois enacted SB 1464, which incorporates cryptocurrency into the Illinois Funeral or Burial Funds Act.
Blockchain
Illinois launched the Illinois Blockchain Initiative “to determine if this groundbreaking technology can be leveraged to create more efficient, integrated and trusted state services, while providing a welcoming environment for the Blockchain community.” The initiative consists of several state and county agencies including the Department of Innovation and Technology. In 2020, the Illinois Blockchain Technology Act went into effect, which generally recognizes the validity of blockchain records in commerce and “Provides for the permitted uses of blockchain technology in transactions and proceedings.” The Act also “Provides limitations to the use of blockchain technology” and “Prohibits units of local government from implementing specified restrictions on the use of blockchain technology.” Illinois passed the Blockchain Business Development Act at around the same time. This act calls for “opportunities to promote blockchain technology,” “legal and regulatory mechanisms that enable and promote the adoption of blockchain technology,” and “educational and workforce training opportunities in blockchain technology.”
Pending Legislation
Illinois’ legislature is currently considering several bills relating to cryptocurrency and blockchain. HB 5287 (passed by the House on February 24, 2022) defines cryptocurrency and allows for state agencies to accept cryptocurrency as payment if there are no exchange fees for conversion into USD. HB 5427 amends the Blockchain Technology Act by setting “forth provisions concerning permissible discovery of facts and information concerning digital assets and discovery procedures for digital assets” and establishes a “Digital Asset Discovery Task Force to conduct a review” of these provisions. SB 3435 “Amends the Blockchain Business Development Act to provide that the Department of Financial and Professional Regulation shall have authority to adopt rules, opinions, or interpretive letters regarding the provision of custodial services for digital assets.” SB 3643 defines cryptocurrency and cryptocurrency mining, and clarifies the definition of a qualifying Illinois datacenter “to include data centers engaged in cryptocurrency mining over a 60-month period.”
Indiana
Cryptocurrency
IN Code § 28-8-4-13 does not mention digital currency in the definition of money transmission. The Indiana Department of Financial Institutions states that “a money transmitter license is not required” for “A fiat or virtual currency exchange, as long as the consumer is strictly buying or selling the currency and the consumer does not have the ability to send fiat currency to another consumer.” Indiana’s governor recently signed into law SB 351, which amends Indiana’s UCC by adding a new chapter governing the possession of controllable electronic records. Indiana adopted SB 188 in 2021, which incorporates cryptocurrency into the Revised Uniform Unclaimed Property Act.
Iowa
Cryptocurrency
IA Code § 533C.103 does not list digital currency businesses as an exception from Iowa’s Uniform Money Services Act. Therefore, businesses dealing with cryptocurrency are likely governed by IA Code § 533C.201, which states that “A person shall not engage in the business of money transmission…unless the person” is licensed. Major cryptocurrency exchanges Coinbase, Binance, and Gemini have all registered as money transmitters in Iowa. HF 2445 was signed into law by Iowa’s governor on June 13, 2022, which amends Iowa’s UCC by adding a new chapter governing the possession of controllable electronic records.
Blockchain
On May 20, 2022, Iowa’s governor signed SB 541, which “permit[s] the use of distributed ledger technology and smart contracts.”
Kansas
Cryptocurrency
KS Stat § 9-508 broadly defines money transmission as “to engage in the business of the sale or issuance of payment instruments or of receiving money or monetary value for transmission to a location within or outside the United States,” which could include digital currency. In 2021, the Kansas Office of the State Bank Commissioner issued guidance clarifying that “an entity engaged solely in the transmission of such currency would not be required to obtain a license in the State of Kansas. However, should the transmission of virtual currency include the involvement of sovereign currency in a transaction, it may be considered money transmission depending on how such transaction is organized.”
Blockchain
On April 18, 2019, HB 2039 was signed into law, which allows “distributed electronic networks or databases” to be used to keep various business records.
Kentucky
Cryptocurrency
KY Rev Stat § 286.11-003 broadly defines money transmission as “engaging in the business of receiving money or monetary value to transmit, deliver, or instruct to be transmitted or delivered, money or monetary value,” which could include digital currency. If so, cryptocurrency businesses would be governed by KY Rev Stat § 286.11-005, which states that “no person shall engage in the business of money transmission in this state without a license.” Major cryptocurrency exchanges Coinbase, Binance, and Gemini have all registered as money transmitters in Kentucky. KY Rev Stat § 393A.010 includes virtual currency under Kentucky’s Unclaimed Property Act. On March 25, both SB 255 and HB 230 were enacted. The two bills lay out provisions for commercial mining of cryptocurrency and its taxation, including a tax break for certain mining operations.
Blockchain
In April 2020, Kentucky adopted SB 55, which “established a Blockchain Technology Working Group” to “evaluate the feasibility and efficacy of using blockchain technology to enhance the security of and increase protection for the state’s critical infrastructure.”
Louisiana
Cryptocurrency
LA Rev Stat § 6:1381, known as the Virtual Currency Business Act, lays out a series of regulations for virtual currency businesses. Most notably, LA Rev Stat § 6:1384 states that “A person shall not engage in virtual currency business activity…unless the person is one of the following: (1) Licensed in this state…(2) Registered with the department and operating pursuant to R.S. 6:1390. (3) Exempt from licensure or registration.” LA Rev Stat § 6:1383 provides exemptions for businesses governed by “(1) The Electronic Fund Transfer Act of 1978. (2) The Securities Exchange Act of 1934. (3) The Commodities Exchange Act of 1936. (4) The Louisiana Securities Law.” This section also exempts regulated financial institutions, foreign exchange businesses, attorneys to the extent of providing escrow services, those using cryptocurrencies for personal or academic purposes, and many others. LA Rev Stat § 6:1389 further exempts “A person whose volume of virtual currency business activity in United States dollar equivalent of virtual currency will not exceed thirty-five thousand dollars annually” under certain other conditions. The Office of Financial Institutions has the right to “take an enforcement measure against a licensee, registrant, or person that is neither a licensee nor registrant but is engaging in virtual currency business activity” under LA Rev Stat § 6:1393.
Pending Legislation
Louisiana’s legislature has recently passed a few bills relating to cryptocurrency. HB 802 (sent to the governor on June 3, 2022) would “allow financial institutions and trust companies to serve as custodians of digital assets.” HCR 103 (presented to the Secretary of State on June 6, 2022) directs the Cash Management Review Board to “research, report, and make recommendations” on “the use of digital assets” in Louisiana. HR 180 (presented to the Secretary of State on June 8, 2022) asks “the Supervisory Committee on Campaign Finance Disclosure to study issues surrounding the acceptance of campaign contributions in the form of cryptocurrency.”
Maine
Cryptocurrency
32 ME Rev Stat § 6102 defines money transmission as “the business of selling or issuing payment instruments or the business of receiving money, including virtual currencies, for transmission or transmitting money, including virtual currencies, within the United States or to locations abroad by any means.” 32 ME Rev Stat § 6103 states that “a person…may not engage in the business of money transmission without.” As virtual currency is explicitly defined under money transmission, such transactions require a license.
Maryland
Cryptocurrency
Financial Institutions Code Ann. § 12-401 defines money transmission as including “Any informal money transfer system engaged in as a business for, or network of persons who engage as a business in, facilitating the transfer of money outside the conventional financial institutions system,” which could include cryptocurrency transactions. Maryland’s Office of the Commissioner of Financial Regulation seems to confirm this inclusion by stating that it regulates “Money Transmission, including transmission of virtual currency.” MD. Financial Institutions Code Ann. § 12-405 states that “A person may not engage in the business of money transmission” unless the person “Is licensed by the Commissioner” or “Is a person exempted from licensing.” The Maryland Financial Consumer Protection Act of 2018 calls for the Financial Consumer Protection Commission to study blockchain technology, cryptocurrency, initial coin offerings, and cryptocurrency exchanges. The act also requires the Office of the Commissioner of Financial Regulation to “identify any gaps in the regulation of Fintech firms, including any specific types of companies that are not subject to regulation under State law.”
Blockchain
In 2019, Maryland adopted SB 136, which “authoriz[es] certain records of a corporation to be maintained by means…a distributed electronic network or database.”
Massachusetts
Cryptocurrency
Under 209 CMR 45.00 MA Code of Regs 45.02, Massachusetts only regulates money transmission to foreign countries. The Massachusetts Department of Banking issued Opinion 19-008 in 2020 which found that a company that processed fiat to virtual currency exchanges and allowed for cross-border virtual currency transactions did not consist of license-requiring international money transmission. Opinion 020-003, also in 2020, found that a company providing a digital wallet service and peer-to-peer transactions did not require a license either.
Pending Legislation
The Massachusetts legislature is currently considering bill HB 126 which establishes “a special commission on blockchain and cryptocurrency.”
Michigan
Cryptocurrency
MI Comp L § 487.1003 defines money transmission services as “selling or issuing payment instruments or stored value devices or receiving money or monetary value for transmission.” MI Comp L § 487.1011 states that “a person shall not provide money transmission services… without a license.” According to Michigan’s Department of Insurance and Financial Services, money transmission services include “holding funds in an e-wallet” and such services providers “would need to obtain the appropriate license.” In 2015, the Michigan Department of Treasury published guidance on how state sales tax applies to virtual currency. In December 2019, Michigan enacted HB 4107, HB 4103, HB 4105, and HB 4106, which amended the Michigan penal code to include definitions for cryptocurrency and distributed ledger technology.
Pending Legislation
The Michigan legislature is currently considering bill SB 888 which establishes a “blockchain and cryptocurrency commission.”
Minnesota
Cryptocurrency
Minnesota has no cryptocurrency-specific laws, but cryptocurrency may be encompassed in existing money transmission statutes. MN Stat § 53B.03 defines money transmission as “selling or issuing payment instruments or engaging in the business of receiving money for transmission or transmitting money.” MN Stat § 53B.02 states that “no person…shall engage in the business of money transmission without a license.” Major cryptocurrency exchanges Coinbase, Binance, and Gemini have all registered as money transmitters in Minnesota.
Mississippi
Cryptocurrency
Mississippi has no cryptocurrency-specific laws, but cryptocurrency may be encompassed in existing money transmission statutes. MS Code § 75-15-3 defines monetary value as “a medium of exchange, whether or not redeemable in money” and money transmission as “to engage in the business of the sale or issuance of checks or of receiving money or monetary value for transmission to a location within or outside the United States by any and all means.” MS Code § 75-15-5 states that “No person…shall engage in the business of money transmission…without having first obtained a license.” Major cryptocurrency exchanges Coinbase, Binance, and Gemini have all registered as money transmitters in Mississippi.
Missouri
Cryptocurrency
Missouri has no cryptocurrency-specific laws, but cryptocurrency may be encompassed in the existing sale of checks law. MO Rev Stat § 361.700 defines a check as “any instrument for the transmission or payment of money and shall also include any electronic means of transmitting or paying money.” MO Rev Stat § 361.705 states that “No person shall issue checks…without first obtaining a license from the director.” Major cryptocurrency exchanges Coinbase, Binance, and Gemini have all registered as money transmitters in Missouri, but Binance is the only one to register under “Sale of Checks.”
Pending Legislation
Missouri’s legislature recently passed HB 1472, which was sent to the governor on May 18, 2022. This bill would modify the offense of money laundering to more broadly encompass financial transactions and adds a definition for cryptocurrency.
Montana
Cryptocurrency
Montana’s Department of Banking and Financial Regulations explicitly states that “There is currently no legislation from the Montana Division of Banking regulating Money Service Businesses (MSBs). MSBs do not have to be licensed with the Division.” MT Admin Rules 44.11.408 states that “A candidate or political committee may accept electronic contributions from online payment service providers and payment gateways…such as Bitcoin or other electronic peer-to-peer systems” and “All electronic contributions shall be reported.” In 2019, Montana’s governor signed HB 584, which exempts cryptocurrency transactions from certain securities laws and defines utility token.
Nebraska
Cryptocurrency
The Nebraska Financial Innovation Act (NE Code § 8-3001 to 3031) lays out a series of guidelines for how digital asset depositories are chartered, operated, supervised, and regulated in Nebraska. The express intent of the Act is to “provide a necessary and valuable service to blockchain innovators and customers, emphasize Nebraska’s partnership with the technology and financial industry, safely grow this state’s ever-evolving financial sector, and afford more opportunities for Nebraska residents.” NE Code § 8-3003 defines a digital asset depository as “a financial institution that securely holds liquid assets…in the form of controllable electronic records.” The same section defines blockchain, controllable electronic record, decentralized finance, fork, and stablecoin. NE Code § 8-3015 states that “No corporation shall act as a digital asset depository without first obtaining authority or a charter to operate” from the Director of Banking and Finance. Existing financial institutions need authorization to open a digital asset depository department while strictly digital asset depository institutions need a new charter. NE Code § 8-3005 permits digital asset depositories to “Carry on a nonlending digital asset banking business” and “Provide payment services.” The same section states that digital asset depositories “shall not accept demand deposits of United States currency” or “make any consumer loans.” NE Code § 8-3024 allows digital asset depositories to “Provide digital asset and cryptocurrency custody services…Issue stablecoins and…Use independent node verification networks and stablecoins for payment activities.” LB 707, signed into law on April 18, amends this section to restrict digital asset and cryptocurrency custody services to cryptocurrency that was either “Initially offered for public trade more than six months prior to the date of the custody services” or “Created or issued by any bank, savings bank, savings and loan association, or building and loan association” authorized to do business in Nebraska. NE Code § 8-3008 requires digital asset depositories to give customers “full and complete” disclosure of account terms and conditions with “no material misrepresentations” and “in readily understandable language.” NE Code § 8-3009 requires that digital asset depositories “maintain unencumbered liquid assets denominated in United States dollars valued at not less than one hundred percent of the digital assets in custody.” The Act overall allows Nebraska banks to offer cryptocurrency services that are not available in the vast majority of other states.
Nebraska has other laws relating to cryptocurrency beyond the Financial Innovation Act. NE Code § 8-2715 defines monetary value as “a medium of exchange, whether or not redeemable in money,” which encompasses cryptocurrency. NE Code § 8-2716 defines money transmission as “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.” NE Code § 8-2725 states that “a person shall not engage in money transmission without a license.” NE Code § 8-2724 states that “The requirement for a [money transmission] license…does not apply to…[chartered] digital asset depository institutions.” 316 NE Admin Rules and Regs ch 316-54-102 includes cryptocurrency under “unacceptable forms of payment” for “Mechanical Amusement Devices” (such as slot machines).
Nevada
Cryptocurrency
The Nevada Financial Institutions Division states that “Any entity that facilitates the transmission of or holds fiat or digital currency…should contact the NFID to request a licensure determination.” Whether a license is required is decided on a case-by-case basis. However, the Division advises that “an entity engaged in the business of selling or issuing checks or of receiving for transmission or transmitting money or credits is required to have a license under [NV Rev Stat § 671]. However, if an entity proposes to serve as a digital custodian for any form of digital currency, then the business may be regulated as a trust company under [NV Rev Stat § 669].” NV Rev Stat § 657a creates a Regulatory Experimentation Program (sandbox) for Product Innovation. Under this program, companies that use “a new or emerging technology, or any novel use of an existing technology, to address a problem, provide a benefit or otherwise offer or provide a financial product or service that is determined by the Director not to be widely available in this State” (NV Rev Stat § 657A.150) can if accepted, “obtain limited access to markets” without “Applying for or obtaining any license or other authorization otherwise required” (NV Rev Stat § 657A.200). The statute lays out a series of specific requirements for disclosure, operation, and oversight during the two-year testing period. In 2019, Nevada adopted three bills that include virtual currency in existing laws. SB 164 “clarif[ies] that certain virtual currencies are intangible personal property for the purposes of taxation.” AB 15 includes virtual currency in the definition of a monetary instrument for the purpose of crimes related to certain financial transactions. SB 44 includes virtual currency in the definition of property under the Revised Uniform Unclaimed Property Act.
Blockchain
In 2017, Nevada enacted SB 398, which made it the first state to ban local governments from taxing blockchain use. The law also “recogniz[es] blockchain technology as a type of electronic record for the purposes of the Uniform Electronic Transactions Act.” Nevada enacted two other blockchain-related laws in 2019 that have similar provisions. SB 162 adds “that a person who uses a public blockchain to secure information does not relinquish any right of ownership related to that information.” SB 163 additionally “revis[es] the definition of ‘electronic transmission’… to include the use of a blockchain” and “authoriz[es] certain business entities to store certain records on a blockchain” and “revis[es] provisions authorizing the Secretary of State to adopt regulations to define certain terms to allow certain business entities to carry out their powers and duties using…blockchains.” In the same year, Nevada created the Cannabis Advisory Commission under AB 533. The commission is tasked with, among other things, “Study[ing] the feasibility of the use of emerging technologies, including…blockchain…as a means of collecting data or efficiently and effectively handling transactions electronically to reduce or eliminate the handling of cash.”
New Hampshire
Cryptocurrency
NH Rev Stat § 399-G:1 defines convertible virtual currency as “a digital representation of value that: (a) Can be a medium of exchange, a unit of account, and/or a store of value; (b) Has an equivalent value in real currency or acts as a substitute for real currency; (c) May be centralized or decentralized; and (d) Can be exchanged for currency or other convertible virtual currency.” NH Rev Stat § 399-G:3 states that “Persons who engage in the business of selling or issuing payment instruments or stored value solely in the form of convertible virtual currency” are exempt from licensing as a money transmitter, but “shall be subject to the provisions of” NH Rev Stat § 358-A (Regulation of Business Practices for Consumer Protection). Businesses that transact with additional forms of monetary value, defined as “a medium of exchange, whether or not redeemable in currency, and includes convertible virtual currency” (NH Rev Stat § 399-G:1), “shall obtain a license” (NH Rev Stat § 399-G:2). The New Hampshire Banking Department has confirmed this interpretation in a written statement. On February 9, 2022, Governor Christopher Sununu signed Executive Order 2022-1, establishing “the Governor’s Commission on Cryptocurrencies and Other Digital Assets” to research and report on “the role and effectiveness of current state laws and regulations governing cryptocurrencies and other digital assets and the reasons why modifications and improvements to such laws and regulations are necessary.”
Pending Legislation
New Hampshire’s legislature is currently considering two bills relating to cryptocurrency. HB 1502 “specifies that digital assets are property within the Uniform Commercial Code; authorizes security interests in digital assets, allows banks to provide custodial services for digital asset property and provides procedures for the provision of custodial services.” HB 1503 “exempts the developer, seller, or facilitator of the exchange of an open blockchain token from certain securities laws.”
New Jersey
Cryptocurrency
NJ Rev Stat § 17:15C-2 broadly defines a payment instrument as an “instrument or written order for the transmission or payment of money,” which could include cryptocurrency. The same statute defines a money transmitter as “a person who engages…in the business of: (1) the sale or issuance of payment instruments for a fee, commission or other benefit; (2) the receipt of money for transmission or transmitting money…; or (3) the receipt of money for obligors for the purpose of paying obligors’ bills, invoices or accounts for a fee, commission or other benefit paid by the obligor.” NJ Rev Stat § 17:15C-4 states that “No person…shall engage in the business of money transmission without a license.” NJ Rev Stat § 3B:14-61.1, New Jersey’s Uniform Fiduciary Access to Digital Assets Act, allows estates to manage digital assets under certain circumstances.
Blockchain
In 2019, New Jersey enacted SB 2297, which “creat[es] the New Jersey Blockchain Initiative Task Force to study whether State, county, and municipal governments can benefit from a transition to a Blockblockchain-based system for recordkeeping and service delivery.”
Pending Legislation
New Jersey’s legislature is currently considering several relevant bills. AB 385 “Requires Department of Treasury to review and approve digital payment platform.” AB 1975/SB 1267 would add the “Virtual Currency and Blockchain Regulation Act” to New Jersey’s statutes. AB 2371/SB 1756 would add the “Digital Asset and Blockchain Technology Act” to New Jersey’s Statutes. AB 3287 “Prohibits public officials from accepting virtual currency and non-fungible tokens as gifts.”
New Mexico
Cryptocurrency
The New Mexico Regulation and Licensing Department defines “Virtual currency exchanging and trading services” as a “Money Service Business (MSB).” As an MSB, businesses must “submit an initial application followed by and annual renewal license applications, along with the appropriate fees.”
New York
Cryptocurrency
New York’s Department of Financial Services established the BitLicense in 2015 under 23 NY Comp Codes Rules and Regs § 200 to regulate virtual currency businesses. 23 NY Comp Codes Rules and Regs § 200.2 defines Virtual Currency Business activity as “any one of the following types of activities…: (1) receiving Virtual Currency for Transmission or Transmitting Virtual Currency, except where the transaction is undertaken for non-financial purposes and does not involve the transfer of more than a nominal amount of Virtual Currency; (2) storing, holding, or maintaining custody or control of Virtual Currency on behalf of others; (3) buying and selling Virtual Currency as a customer business; (4) performing Exchange Services as a customer business; or (5) controlling, administering, or issuing a Virtual Currency.” 23 NY Comp Codes Rules and Regs § 200.3 states that “No Person shall, without a license obtained from the superintendent as provided in this Part, engage in any Virtual Currency Business Activity.” The rest of the statute lays out a series of requirements for licensees including capital requirements, AML programs, consumer protection, and many others. NY Banking L § 641 states that “No person shall engage in the business of…receiving money for transmission or transmitting the same, without a license.” Thus, businesses that transact in both fiat and cryptocurrency require both a money transmitter license and a BitLicense. This interpretation is confirmed by the Department of Financial Services’ BitLicense FAQs. The Department also states that “A business that is chartered under the New York Banking Law (for example, a New York State limited purpose trust company or a New York State bank) can engage in Virtual Currency Business Activity without a BitLicense if it has received the Superintendent’s approval to do so.” In 2020, New York’s Department of Financial Services proposed offering a conditional BitLicense for virtual currency companies to operate in a limited fashion by collaborating with authorized BitLicensees. This would allow early-stage companies to be supervised by the Department of Financial Services without going through the expensive process of getting a full BitLicense. In 2018, New York enacted AB 8783 to “establish the digital currency task force.” In 2019, SB 1194 increased the membership of the task force to 13 members. Signed into law by Governor Kathleen Hochul on April 9, 2022, AB 9009 “expands the definition of financial institution under the financial institution data match program,” which now includes virtual currency businesses. On June 8, 2022, New York’s Department of Financial Services released Guidance on the Issuance of U.S. Dollar-Backed Stablecoins, which adds requirements for “the redeemability of such stablecoins; the asset reserves that back such stablecoins…; and attestations concerning the backing by these Reserves.”
Pending Legislation
New York’s legislature is currently considering several relevant bills. AB 3099/SB 5643 “Establishes the office of financial resilience to develop and implement new programs and initiatives for the purpose of supporting local economies and promoting resilient financial models.” AB 3336 “establishes a regulatory sandbox program” for “financial technology products and services.” AB 3747 “Establishes a task force to study the potential designation of economic empowerment zones for the mining of cryptocurrencies in the state of New York.” AB 3860/SB 5042 “Establishes a task force to study the impact of a state-issued cryptocurrency on the state of New York.” AB 3906 “Establishes that state agencies are allowed to accept cryptocurrencies such as bitcoin, ethereum, litecoin and bitcoin cash as payment.” AB 7389 (sent to the governor on June 2, 2022) “Establishes a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions; provides that such operations shall be subject to a full generic environmental impact statement review.” AB 7742 (sent to the governor on June 2, 2022) “Includes unclaimed virtual currency as abandoned property.” AB 7849/SB 7500 “Requires the…department of financial services to assess persons regulated under the financial services law that engage in virtual currency business activity for the operating expenses of the department that are solely attributable to regulating such persons.” AB 7866/SB 6584 “Directs the New York state energy research and development authority to conduct a study on powering cryptocurrency mining facilities with renewable energy.” AB 8598 “Prohibits the investment of certain public funds with companies conducting a cryptocurrency business activity; directs the comptroller to take appropriate action to sell, redeem, divest or withdraw any investment held in such company.” AB 8820/SB 8839 “Establishes the offenses of virtual token fraud, illegal rug pulls, private key fraud and fraudulent failure to disclose interest in virtual tokens.” AB 9028, SB 8838, AB 9029/SB 9410, and SB 9275 require disclosures in advertisements involving virtual tokens. AB 9086/SB 7272 “Relates to reporting of cryptocurrency holdings on the annual statement of financial disclosure filed with the legislative ethics commission or the joint commission on public ethics.” AB 9275 (sent to the governor on June 3, 2022) “Establishes the New York state cryptocurrency and blockchain study task force to” study “the effects of the widespread use of cryptocurrencies and other forms of digital currencies and…blockchain technology, in the state.” SB 5044 “Creates the digital currency task force to” study “the potential effects of the widespread implementation of digital currencies on financial markets in the state.”
North Carolina
Cryptocurrency
NC Gen Stat § 53-208.42 states that the definition of money transmission “includes maintaining control of virtual currency on behalf of others.” NC Gen Stat § 53-208.43 adds that “No person …shall engage in the business of money transmission…without a license.” NC Gen Stat § 53-208.44 exempts “A person appointed by a payee to collect and process payments as the bona fide agent of the payee” for “transactions conducted in whole or in part in virtual currency” from this licensing requirement. Miners and blockchain software companies are exempt from such requirements. NC Gen Stat § 53-208.47 states that businesses involved with “virtual currency transmission” may be required to “obtain additional [surety bond] insurance coverage to address related cybersecurity risks inherent in the applicant’s business model.” NC Gen Stat § 53-208.48 gives the Commissioner of Banks the right to “request that [a] licensee verify…aggregate virtual currency transmission obligations outstanding and virtual currency held as permissible investments, including virtual currency stored offline” if a business has cryptocurrency investments. The North Carolina Commissioner of Banks’ Money Transmitter Frequently Asked Questions addresses more specific requirements.
Pending Legislation
North Carolina’s legislature is currently considering HB 631/SB 688, which includes “Digital, crypto, and virtual currencies” under the definition of “Cash equivalent” for sports betting.
North Dakota
Cryptocurrency
North Dakota’s Department of Financial Institutions states that they do “not consider the control or transmission of virtual currency to fall under the scope of [the North Dakota’s Money Transmission Act]. However, any such company that also holds or transmits fiat currency will still need to secure a money transmitter license.”
Blockchain
In 2019, North Dakota adopted three blockchain-related bills. HCR 3004 “request[s] the Legislative Management to study the potential benefit value of blockchain technology implementation and utilization in state government administration and affairs.” HB 1048 mandates that the Department of Financial Institutions “research and develop the use of distributed ledger-enabled platform technologies, such as blockchains, for computer-controlled programs, data transfer and storage, and program regulation to protect against falsification, improve internal data security, and identify external hacking threats…The department shall select a state agency…to serve as a pilot program for the implementation and use of distributed ledger-enabled platform technologies.” HB 1045 recognizes signatures, records, and contracts secured through blockchain technology as legally valid.
Ohio
Cryptocurrency
Ohio Rev Code § 1315.01 broadly defines money transmission as “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,” which includes cryptocurrency transmission. Ohio Rev Code § 1315.02 states that “No person” shall transmit money “unless that person…is a licensee.” The Ohio Department of Commerce’s application for a money transmission license requires that virtual currency transacting applicants “provide a current third party security audit of all relevant computer and information systems.”
Blockchain
Ohio Rev Code § 1306.01 states that a record, contract, or signature “that is secured through blockchain technology is considered to be” legally valid.
Pending Legislation
Ohio’s legislature is currently considering two bills relating to cryptocurrency. HB 348 makes changes to the Unclaimed Funds Law to include virtual currency. HB 585 “create[s] a special purpose depository institution charter,” “provide[s] for the formation and management of decentralized autonomous organization LLCs,” “amend[s] the Uniform Commercial Code to address the classification of and perfection of security interests in digital assets,” and “allow[s] banks to provide custodial services of digital assets.”
Oklahoma
Cryptocurrency
6 OK Stat § 6-1512 defines a money transmitter as “any person who engages in the business of accepting currency or funds denominated in currency, and transmits the currency or funds or the value of the currency or funds, by any means” including through “an electronic funds transfer network.” If this definition were interpreted to include cryptocurrency transactions, cryptocurrency businesses would be required to hold a license under 6 OK Stat § 6-1513.
Blockchain
In 2019, Oklahoma adopted SB 700, which states that records, contracts, and signatures “secured through blockchain technology” are considered legally valid.
Oregon
Cryptocurrency
OR Rev Stat § 717.200 defines money as “a medium of exchange that…Represents value that substitutes for currency,” and money transmission as “selling or issuing payment instruments or engaging in the business of receiving money for transmission, or transmitting money.” These definitions likely include cryptocurrency. Therefore, cryptocurrency businesses fall under OR Rev Stat § 717.205, which states that “A person…may not conduct a money transmission business without a license.” In 2019, Oregon adopted HB 2488, which states that “Unless authorized by the State Treasurer, the state government…may not accept payments using cryptocurrency.” It further states that “A person may not make a contribution to a political candidate, a political committee or a petition committee using cryptocurrency.”
Pennsylvania
Cryptocurrency
The Pennsylvania Department of Banking and Securities issued Money Transmitter Act Guidance for Virtual Currency Businesses to clarify which businesses need licenses or other supervision. The guidance states that “Virtual Currency Trading Platforms…are not money transmitters,” and that “Virtual Currency Kiosks, ATMs, and Vending Machines…would not be money transmitters under the MTA.” Therefore, neither type of cryptocurrency business is subject to the Money Transmitter Act or its licensing requirements.
Pending Legislation
Pennsylvania’s legislature is currently considering several relevant bills. HB 1724 “Establish[es] a task force on digital currency and the impact on widespread use of cryptocurrency and other forms of digital currencies in this Commonwealth.” HB 2512 includes virtual currency in the definition of a cash transaction for real property transactions. SB 399 and SB 401 relate to ethics standards and financial disclosure requirements for public officers and include virtual currency in the definition of a cash gift. SB 1053 requires that “The [Transportation Commission]…establish and maintain a system for the payment of tolls or charges by an operator of a vehicle using alternative electronic payment options” including “digital wallets, peer-to-peer money transfer systems and cryptocurrencies.” SB 1262 “Amends Title 27 (Environmental Resources) of the Pennsylvania Consolidated Statutes, providing for emerging technologies” and defines cryptocurrency.
Rhode Island
Cryptocurrency
RI Gen L § 19-14-1 includes “maintaining control of virtual currency or transactions in virtual currency on behalf of others” under the definition of currency transmission. RI Gen L § 19-14-2 states that “No person shall engage within this state in the business of…Providing currency transmission for a fee or other consideration…without first obtaining a license or registration.” RI Gen L § 19-14.3-1 lays out a series of exemptions from this requirement. RI Gen L § 19-14.3-3.5 is a list of disclosures virtual currency businesses must make to their customers. RI Gen L § 19-14.3-3.6 states that “A licensee that has control of virtual currency for one or more persons shall maintain in its control an amount of each type of virtual currency sufficient to satisfy the aggregate entitlements of the persons to the type of virtual currency.” Rhode Island’s Department of Business Regulation has posted further guidance in the Rhode Island Currency Transmission Law: Frequently Asked Questions.
Pending Legislation
HB 7254 “would establish an economic growth blockchain act,…regulate virtual and digital assets, and establish depository banks for these purposes.” HB 8152 includes a “green coin” cryptocurrency as part of “The Green Housing Public-Private Partnership Act.”
South Carolina
Cryptocurrency
The South Carolina Attorney General’s Money Services Division stated in a 2018 interpretive letter that “virtual currencies lack the characteristics of mediums of exchange. Therefore, it is the view of the Division that virtual currencies alone do not qualify as monetary value. However, to the extent that virtual currency transactions also involve the transfer of fiat currency, they may be subject to money transmission regulations under the [South Carolina Anti-Money Laundering] Act.” The same letter stated that “activities as they relate to virtual currencies do not require a license under the Act.” The Attorney General stated in Administrative Order Number MSD-19003 that “When an ATM does not act as a third party, and only facilitates a sale or purchase of virtual currency by the ATM operator directly with the customer…no license is required under the Act.” However, “The exchange of virtual currency for fiat currency through an ATM that acts as a third party exchanger that facilitates contemporaneous exchanges of virtual currency for fiat currency…is money transmission and requires a license under the Act.” The South Carolina Attorney General’s Money Services Division has posted further guidance on their Money Services FAQs page.
Blockchain
In 2020, South Carolina’s Senate adopted SR 1158 “to acknowledge the importance of emerging blockchain technology and to call upon the residents of south carolina to join in encouraging the promotion of blockchain technology in our state.”
South Dakota
Cryptocurrency
SD Codified L § 51A-17-1 broadly defines monetary value as “any medium of exchange, whether or not redeemable in money,” and money transmission as “engagement in the business of the sale or issuance of payment instruments or stored value or of receiving money or monetary value for transmission.” The South Dakota Division of Banking stated in 2019 that “virtual currencies, including cryptocurrencies like Bitcoin, are ‘monetary value.’” Therefore, cryptocurrency businesses fall under SD Codified L § 51A-17-4, which states that “No person…may engage in the business of money transmission…without obtaining a license.” On February 8, 2022, Governor Kristi Noem signed SB 47, which “revise[s] certain provisions regarding money transmission” including adding a requirement that “licensee[s] transmitting virtual currencies shall hold like-kind virtual currencies of the same volume as that held by the licensee but that is obligated to consumers.”
Blockchain
SD Codified L § 53-12-1 defines blockchain technology. It also “includes a record that is secured through blockchain technology” under the definition of electronic record, and “includes a signature that is secured through blockchain technology” under the definition of electronic signature.
Tennessee
Cryptocurrency
The Tennessee Department of Financial Institutions issued a memo in 2015 entitled Regulatory Treatment of Virtual Currencies under the Tennessee Money Transmitter Act. It stated that “cryptocurrency is not money under the Tennessee Money Transmitter Act” and “receiving it in exchange for a promise to make it available at a later time or different location is not money transmission…However, when a cryptocurrency transaction does include sovereign currency, it may be money transmission depending on how the sovereign currency is handled.” The guidance went on to say “The exchange of cryptocurrency for sovereign currency between two parties is not money transmission…Exchange of one cryptocurrency for another cryptocurrency is not money transmission…Transfer of cryptocurrency by itself is not money transmission…Exchange of cryptocurrency for sovereign currency through a third party exchanger is generally money transmission…Exchange of cryptocurrency for sovereign currency through an automated machine is usually but not always money transmission.” Cryptocurrency businesses whose activity is deemed money transmission would be required to hold a license under TN Code § 45-7-102. TN Code § 66-29-102 includes virtual currency as property under Tennessee’s Uniform Unclaimed Property Act. SB 535 was signed into law on April 14, 2022, and states that “a governmental entity shall not pay, compensate, award, or remit funds in the form of, or facilitate directly or indirectly the conversion of compensation or funds to, blockchain, cryptocurrency, non-fungible tokens, or virtual currency to an individual person, corporation, or other entity without the prior written approval of the state treasurer.” Local governments are also forbidden from “procur[ing] services for the performance of the” above-stated actions.
Blockchain
In 2018, Tennessee enacted SB 1662, which states that “Smart contracts may exist in commerce. No contract relating to a transaction shall be denied legal effect, validity, or enforceability solely because that contract is executed through a smart contract.” It further states that records, contracts, and signatures secured through distributed ledger technology are legally valid. It also confirms that “a person that…uses distributed ledger technology to secure information that the person owns or has the right to use retains the same rights of ownership or use with respect to that information as before the person secured the information using distributed ledger technology.” On April 20, 2022, Governor Bill Lee signed HB 2645, which lays out provisions for governing Decentralized Autonomous Organizations (DAOs).
Texas
Cryptocurrency
The Texas Department of Banking issued Supervisory Memorandum 1037 in 2019. It stated that “Exchanging virtual currency for sovereign currency is not currency exchange under the Texas Finance Code” and “no currency exchange license is required in Texas to conduct any type of transaction exchanging virtual with sovereign currencies.” The memo further states that “cryptocurrency is not money under the Money Services Act” and “receiving it in exchange for a promise to make it available at a later time or different location is not money transmission.” More specifically, the memo advises that “Exchange of cryptocurrency for sovereign currency between two parties is not money transmission…Exchange of one cryptocurrency for another cryptocurrency is not money transmission…Transfer of cryptocurrency by itself is not money transmission…Exchange of cryptocurrency for sovereign currency through a third-party exchanger is generally money transmission…Exchange of cryptocurrency for sovereign currency through an automated machine is usually but not always money transmission.” The memo distinguishes stablecoins as possibly being “considered money or monetary value under the Money Services Act” and thus “receiving it in exchange for a promise to make it available at a later time or different location may be money transmission.” Cryptocurrency businesses that are deemed money transmitters must be licensed under TX Fin Code § 151.302. In 2019, Texas enacted SB 207, which includes digital currency under the definition of funds for money laundering offenses.
Blockchain
In 2019, Texas adopted two bills relating to blockchain technology. SB 1859 included blockchain in the definition of electronic data systems under Texas’s Business Organizations Code. HB 4214/SB 64 requires state agencies to “consider using next generation technologies, including…blockchain technology.”
Utah
Cryptocurrency
UT Code § 7-25-102 states that “money transmission…does not include a blockchain token.” Based on this definition, cryptocurrency businesses would not be subject to licensing requirements under UT Code § 7-25-201. UT Code § 67-4a-102 defines virtual currency as property under Utah’s Revised Uniform Unclaimed Property Act. On March 24, 2022, Governor Spencer Cox signed into law two bills relating to cryptocurrency. HB 456 “makes provisions related to the use of digital user assets to make payments to participating government agencies and political subdivisions.” SB 182 “establishes a framework for the ownership of digital assets.”
Blockchain
HB 335, adopted on March 24, 2022, “creates the Blockchain and Digital Innovation Task Force” to “develop knowledge and expertise about blockchain and related technologies” and “make policy recommendations related to blockchain and related technologies.” In 2019, Utah enacted the Blockchain Technology Act, which “defines and clarifies terms related to blockchain technology” and “exempts a person who facilitates the creation, exchange, or sale of certain blockchain technology-related products from [Utah’s Money 15 Transmitter Act].” That same year, Utah’s legislature adopted HJR 19, a “Joint Resolution Directing a Study of Blockchain Technology.” Utah’s regulatory sandbox was also created in 2019 under HB 378, “which allows a participant to temporarily test innovative financial products or services on a limited basis without otherwise being licensed or authorized to act under the laws of the state” and explicitly includes blockchain technology under the definition of innovation.
Vermont
Cryptocurrency
8 V.S.A. § 2500 includes virtual currency in Vermont’s money transmission statute. 8 V.S.A. § 2502 requires money transmitters, including cryptocurrency businesses, to obtain a license. 8 V.S.A. § 2541 states that “virtual currency owned by the licensee” is a permissible investment for money transmitters, “but only to the extent of outstanding transmission obligations received by the licensee in identical denomination of virtual currency.” On May 27, 2022, Governor Phil Scott signed HB 515, which states that kiosks “where a consumer may access money transmission services, including buying or selling virtual currency” must be registered and licensed, and are subject to certain disclosure requirements. In 2019, HB 550 included virtual currency in the definition of property under Vermont’s Revised Uniform Unclaimed Property Act.
Blockchain
12 V.S.A. § 1913 states that “A digital record electronically registered in a blockchain…shall be considered a record of regularly conducted business activity pursuant to Vermont Rule of Evidence 803(6) unless the source of information or the method or circumstance of preparation indicate lack of trustworthiness.” It also states that “A digital record electronically registered in a blockchain shall be self-authenticating pursuant to Vermont Rule of Evidence 902, if it is accompanied by a written declaration of a qualified person, made under oath.” In 2017, Vermont adopted two bills related to blockchain technology. SB 135 states that “The existing Vermont legislation on blockchain technology and other aspects of e-finance have given Vermont the potential for leadership in this new era of innovation as well, with the possibility of expanded economic activity in the financial technology sector that would provide opportunities for employment, tax revenues, and other benefits.” SB 269 enabled the creation of “blockchain-based limited liability compan[ies],” which are described as “limited liability compan[ies] organized…for the purpose of operating a business that utilizes blockchain technology for a material portion of its business activities.” The bill also requires the Department of Financial Regulation to “review the potential application of blockchain technology to the provision of insurance and banking and consider areas for potential adoption and any necessary regulatory changes in Vermont.”
Virginia
Cryptocurrency
In a 2021 Notice to Virginia Residents Regarding Virtual Currency, the Virginia Bureau of Financial Institutions stated that the Bureau “does not currently regulate virtual currencies; however, to the extent virtual currency transactions also involve the transfer of fiat currency… they may be regulated under [VA Code § 6.2-1901].” On April 11, 2022, governor Glenn Youngkin signed into law HB 263, which allows Virginia banks to “provide [their] customers with virtual currency custody services so long as the bank has adequate protocols in place to effectively manage risks and comply with applicable laws” and “provide virtual currency custody services in either a nonfiduciary or fiduciary capacity.”
Washington
Cryptocurrency
WA Rev Code § 19.230.010 defines money transmission as “receiving money or its equivalent value (equivalent value includes virtual currency) to transmit, deliver, or instruct to be delivered to another location.” WA Admin Code 208-690-015 states that “Storage of virtual currency by a person when the virtual currency is owned by others and the person storing the virtual currency does not have the unilateral ability to transmit the value being stored” is “excluded from the [Uniform Money Services] Act.” Therefore, only businesses that transmit cryptocurrency are required to be licensed under WA Rev Code § 19.230.030. WA Rev Code § 19.230.040 states that, “For business models that store virtual currency on behalf of others, the applicant must provide a third-party security audit of all electronic information and data systems acceptable to the director.” WA Admin Code 208-690-030 has a similar provision. WA Rev Code § 19.230.200 states that “A licensee transmitting virtual currencies must hold like-kind virtual currencies of the same volume as that held by the licensee but which is obligated to consumers.” WA Admin Code 208-690-085 has a similar provision. WA Rev Code § 19.230.370 and WA Admin Code 208-690-205 layout disclosure requirements specific to virtual currency businesses. WA Admin Code 208-690-060 states that “The minimum tangible net worth if the company provides virtual currency storage is one hundred thousand dollars,” which is different from the net worth requirement for other money transmitters. Washington’s Department of Financial Institutions has further guidance on their page entitled FinTech Licensing and Regulation Guidance. On March 30, 2022, Governor Jay Inslee sign into law SB 5531, which includes virtual currency in the definition of property under the Uniform Unclaimed Property Act. The Washington Department of Revenue stated in 2019 that “Taxpayers must convert bitcoin [and other cryptocurrency] to US dollars, prior to remitting payment to the Department of Revenue.” The Department also gave tax guidance for accepting virtual currency in a sales transaction. In the same 2019 guidance statement, the Department announced a tax on Bitcoin mining “determined by the value of the bitcoin at the time it is obtained by the miner.” In 2020, the State of Washington Securities Division stated in a consent order that “The offer and/or sale of [ERC-20 tokens named RHOCs]…constitute the offer and/or sale of a security as defined in [WA Rev Code § 21.20.005].” This means that the unregistered offering violated WA Rev Code § 21.20.040.
Blockchain
In 2019, Washington enacted SB 5638, which “intends to encourage the development of distributed ledger technology.” The bill defines blockchain, distributed ledger technology, and electronic record. It states that “An electronic record may not be denied legal effect, validity, or enforceability solely because it is generated, communicated, received, or stored using distributed ledger technology.”
West Virginia
Cryptocurrency
WV Code § 32A-2-1 broadly defines both currency transmission and money transmission as “engaging in the business of…receiving currency, the payment of money, or other value that substitutes for money by any means for the purpose of transmitting,” which seems to include cryptocurrency. WV Code § 32A-2-2 states that “a person may not engage in the business of currency exchange, transportation or transmission in this state without a license.” WV Code § 31A-8G-1 creates the West Virginia Fintech Regulatory Sandbox Program. According to WV Code § 31A-8G-4, a licensee of this Sandbox “is not subject to state laws that regulate financial products or services.” WV Code § 61-15-1 explicitly includes cryptocurrency under the definition of monetary instruments which are banned from being used to launder value. On March 26, 2022, Governor Jim Justice signed HB 4511, which amends the Unclaimed Property Act to include provisions for the treatment of virtual currency.
Wisconsin
Cryptocurrency
The Wisconsin Department of Financial Institutions states that “[WI Stat § 217.01] does not currently give the Department the authority to regulate virtual currency. The division is therefore unable to license or supervise companies whose business activities are limited to those involving virtual currency. However, should the transmission of virtual currency include the involvement of sovereign currency, it may be subject to licensure depending on how the transaction is structured.”
Wyoming
Cryptocurrency
WY Stat § 40-22-104 states that “Buying, selling, issuing, or taking custody of payment instruments in the form of virtual currency or receiving virtual currency for transmission” is exempt from the Wyoming Money Transmitters Act and its licensing requirements. WY Stat § 40-29 establishes the Financial Technology Sandbox, which cryptocurrency businesses may join. WY Stat § 40-29-103 states that Sandbox participants “may be granted a waiver of specified requirements imposed by statute or rule.” WY Stat § 40-29-106 and WY Stat § 40-29-104 offer specifics on applying to and operating under the Sandbox. WY Stat § 13-12-101 establishes the Special Purpose Depository Institutions Act. The Wyoming Division of Banking has stated that this act allows special purpose depository institutions (SPDIs) “to receive deposits and conduct other activity incidental to the business of banking, including custody, asset servicing, fiduciary asset management, and related activities.” The Division further states that “SPDIs will likely focus on digital assets, such as virtual currencies, digital securities and digital consumer assets. For example, SPDIs may elect to provide custodial services for digital assets and, in accordance with customer instructions, undertake authorized transactions on behalf of customers. SPDIs may also conduct activity under Wyoming regulations tailored to digital assets, which address issues such as technology controls, transaction handling, and custody operations for digital assets.” WY Stat § 34-29-101 is a statute entirely dedicated to digital assets, which defines key terms, classifies digital assets as property, and gives guidance for custodial services along with other aspects of digital asset businesses. WY Stat § 34-29-106, the Utility Token Act, exempts utility tokens from Wyoming’s securities laws if certain conditions are satisfied. In 2019, HB 62 was enacted to “establi[sh] that open blockchain tokens with specified consumptive characteristics are intangible personal property and not subject to a securities exemption.” The same bill lays out notification requirements and enforcement authorities of the state regulator. That same year, HB 185 was adopted to allow “corporations to issue certificate tokens in lieu of stock certificates as specified.” This collection of laws makes Wyoming arguably the most cryptocurrency-friendly state in the country.
Blockchain
In 2018, Wyoming enacted HB 101, which “authoriz[ed] corporations to use electronic networks or databases for the creation or maintenance of corporate records.” In 2019, Wyoming adopted two bills relating to blockchain technology. HB 1 “created the blockchain task force.” HB 70 “authoriz[es] the secretary of state to develop and implement a blockchain filing system.” In 2020, Wyoming enacted two more bills relating to blockchain technology. HB 27 “creat[es] the select committee on blockchain, financial technology and digital innovation technology.” SB 72 appoints “executive branch liaisons” to “Develop and introduce legislation as necessary to promote blockchain, financial technology and digital innovation in Wyoming.” On March 9, 2022, Governor Mark Gordon signed into law SF 68, which “amend[s] statutory provisions regulating decentralized autonomous organizations,” “amend[s] definitions,” “amend[s] the obligations of members and dissociated members,” and “amend[s] factors for dissolution of a decentralized autonomous organization.”
| State | Blockchain Law or Regulation | Cryptocurrency Law or Regulation | No Law or Regulation (yet) |
| Alabama | X | ||
| Alaska | X | ||
| Arizona | X | X | |
| Arkansas | X | ||
| California | X | X | |
| Colorado | X | X | |
| Connecticut | X | X | |
| Delaware | X | ||
| District of Columbia | X | ||
| Florida | X | X | |
| Georgia | X | ||
| Hawaii | X | ||
| Idaho | X | ||
| Illinois | X | X | |
| Indiana | X | ||
| Iowa | X | X | |
| Kansas | X | ||
| Kentucky | X | X | |
| Louisiana | X | ||
| Maine | X | ||
| Maryland | X | X | |
| Massachusetts | X | ||
| Michigan | X | X | |
| Minnesota | X | ||
| Mississippi | X | ||
| Missouri | X | ||
| Montana | X | ||
| Nebraska | X | X | |
| Nevada | X | X | |
| New Hampshire | X | ||
| New Jersey | X | X | |
| New Mexico | X | ||
| New York | X | ||
| North Carolina | X | X | |
| North Dakota | X | ||
| Ohio | X | X | |
| Oklahoma | X | ||
| Oregon | X | ||
| Pennsylvania | X | ||
| Rhode Island | X | ||
| South Carolina | X | ||
| South Dakota | X | X | |
| Tennessee | X | X | |
| Texas | X | X | |
| Utah | X | X | |
| Vermont | X | X | |
| Virginia | X | ||
| Washington | X | X | |
| West Virginia | X | X | |
| Wisconsin | X | ||
| Wyoming | X | X |
Draft for discussion. Not intended as legal advice. Updated as of June 23, 2022.
[1] See also dfpi.ca.gov/2015/01/27/dbo-commissioner-owen-clarifies-coinbase-exchanges-regulatory-status-in-california/
[2] See portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/1-15-2019.pdf, portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/2-21-2019.pdf, portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/2-22-2019-1.pdf, portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/2-22-2019-2.pdf
[3] See portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/11-1-2018.pdf, portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/2-1-2019.pdf, portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/5-15-2019-2.pdf, portal.ct.gov/-/media/DOB/Consumer-Credit-Licensing-Info/12-19-2019.pdf
[4] See HB 2384, SB 3025, HB 2287, SB 2697, HB 2108, SB 3076
Joseph Jasperse
Student Director of The Stevens Center Blockchain Laboratory, The Wharton School