Pennsylvania Regulator Deems Virtual Currency Trading Platforms are not Money Transmitters

February 04, 2019

The Pennsylvania Department of Banking and Securities (DoBS) published on January 23, 2019 interpretive guidance in which the DoBS indicates that virtual currency is not “money” and that certain virtual currency exchanges are not “money transmitters” under the Commonwealth’s Money Transmitter Act (the Act). As a result, a virtual currency trading platform that operates in the manner described in the guidance and provides services to persons located in Pennsylvania would not need to register as a money transmitter with the DoBS.

As background, the Act requires any person that “engage[s] in the business of transmitting money by means of a transmittal instrument for a fee or other consideration with or on behalf of an individual” to obtain a money transmitter’s license from the DoBS. 

In the guidance, the DoBS interprets “money” to mean fiat currency “issued by the United States” and explains that a typical virtual currency trading platform does not engage in the business of a money transmitter and therefore would not be subject to the Act. 

The DoBS notes that a typical web-based virtual currency trading platform enables users to buy or sell virtual currencies in exchange for fiat or other virtual currencies. The DoBS further notes that a typical web-based platform does not “directly handle” fiat currency; rather, payments in fiat currency made by or to a user are “maintained in a bank in the Platform’s name at a depository institution.” Under these circumstances, the DoBS reasoned that such platforms are not money transmitters under the Act because money is not transferred “from a user to another user or 3rd party,” and the platform “is not engaged in the business of providing payment services or money transfer services.”

The DoBS also notes that ATMs, vending machines, and “virtual currency kiosks” that charge a transaction fee for dispensing virtual currency, or fiat currency in exchange for virtual currency, also do not involve the transfer of money to a third party. As such, companies that operate these devices are not money transmitters for purposes of the Act and would not need to obtain a money transmitters license.

Money transmitters are regulated on a state-by-state basis in the United States. In contrast to the approach taken by DoBS, some states have chosen instead to revise their money transmitter laws to expressly cover virtual currencies or interpret existing money transmitter laws to cover virtual currencies. Companies that provide virtual currency exchange services should consult with legal counsel to confirm that their practices are consistent with applicable state laws.


1) Money Transmitter Act Guidance for Virtual Currency Businesses, Pennsylvania Department of Banking and Securities (January 23, 2019).

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