Responding to queries from various cryptocurrency proponents, the Pennsylvania Department of Banking and Securities finally clarified that crypto exchanges are not considered as money transmitters. This means that crypto exchanges don’t need to secure a money transmission license to operate.
To further explain the issue, the Department released the Money Transmitter Act Guidance for Virtual Currency Business or MTA. Said act defines “money” as:
“currency or legal tender or any other product that is generally recognized as a medium of exchange.” Additionally, Pennsylvania law has defined money as “[l]awful money of the United States” and “[a] medium of exchange currently authorized or adopted by a domestic or foreign government.” See 1 Pa. C.S. §1991; see also 13 Pa. C.S. §1201(b)(24).
In short, in Pennsylvania, only fiat currency or currency issued by the United States government is the only recognised money. The act also explains that virtual currency such as Bitcoin (BTC) is not to be considered as “money” under the said act. Virtual currency has not yet been designated as legal tender in the United States.
In addition, the MTA states that those entities in the business of transmitting fiat money are required to be licensed and are allowed to charge transfer fees. Crypto exchanges don’t fall under these licensing requirements since these entities do not directly handle fiat currency. Fiat currency that a user pay to another user is maintained in a bank account in the crypto exchanges stored somewhere.
Likewise, the MTA also ruled out that cryptocurrency kiosk, ATM and vending machines that exchange virtual currency into fiat money are not transmitters. The reason being the fact that some Kiosks which can either be a one-way system that dispense virtual currency in exchange for fiat currency or two-way systems do not really transfer money to a third party. The users just exchange fiat for virtual currency and vice versa.