In an About-Face, Pennsylvania to Regulate Virtual Currency as Money

By: Jeremy McLaughlin and Joshua Durham

Based on a new statement of policy (“Statement”) issued on 20 April 2024 by Pennsylvania’s Department of Banking and Securities (“Department”), effective 15 October 2024, the Department will include virtual currency in the definition of “money” for purposes of the state’s money transmission law (“Law”). Previously, in January 2019, the Department had issued guidance concluding the opposite, that only fiat currency constituted “money” under the Law. The Department’s about-face follows other state regulators that have increasingly concluded that virtual currency is regulated under their state money transmission laws.

The Law’s definition of money includes “any other product that is generally recognized as a medium of exchange.” In the Statement, the Department reasoned that because virtual currency is “increasingly and widely accepted as a method of payment…and can be used to purchase goods and services in thousands of physical locations and online,” it is generally recognized as a medium of exchange, and thus considered “money.”

With this shift in policy, Pennsylvania joins around half of all other states in regulating virtual currency under money transmission laws. We are closely monitoring these issues, please reach out to a member of our Payments, Banking Regulation, and Consumer Financial Services group for further information.

Copyright © 2024, K&L Gates LLP. All Rights Reserved.