Alaska Will Require Licensing for Crypto Money Transmitters
By Jeremy M. McLaughlin and Brenden R. Chainey
On November 30, Alaska amended its money transmitter regulations to, among other things, include virtual currency transactions within the definition of money transmission. With this new change (effective January 1, 2023), companies engaged in money transmission involving virtual currency will be required to obtain a money transmission license.
On November 30, Alaska’s Division of Banking and Securities (DBS) adopted the following changes:
- 3 AAC 13.810 was amended and expands the definition of permissible investments to include virtual currency for outstanding obligations denominated in the same virtual currency;
- 3 AAC 13.990 was repealed and readopted to add a new definition of monetary value that includes virtual currency; and
- 3 AAC 13.990 was changed to include a definition for virtual currency to mean “a digital representation of value that is used as a medium of exchange, unit of account, or store of value; and is not money, whether or not denominated in money.”
Prior to the enactment of this new regulation, companies engaged in virtual currency activity were required to enter into a Limited Licensing Agreement (LLA) with DBS, which required the company to post a statement saying that its money transmitter license did not cover virtual currencies. With the explicit inclusion of virtual currency within DBS regulations, DBS is phasing out the LLA requirement and these agreements will be voided effective January 1. It is unclear if current licensees that engage in virtual currency activity will have to take any additional actions because of the new regulations. Presumably, their current licenses should cover their virtual currency activity (assuming that it was disclosed to DBS in their original application). However, we are waiting on DBS to provide clarity on this point.
For those companies who concluded that their virtual currency activity did not require them to obtain an Alaskan money transmitter license, a reassessment of their compliance status going forward may need to be undertaken as the new regulations go into effect at the beginning of the New Year.