A U.S. Regulatory Patchwork Quilt: Cryptocurrency and Money Transmitter Licensing

July 01, 2019

This article focuses on the different answers given by state authorities to the question: Are cryptocurrencies subject to regulation under money transmit-ter licensing laws? This question is important because the federal law definition of “money transmitting” depends in part on state laws, which vary considerably. Finally, the article discusses two potential policy solutions to the present patchwork quilt of varying state regulations.

According to its original design, Bitcoin was intended to reduce market participants’ need to rely on “financial institutions serving as trusted third parties to process electronic payments.” 1 While Bitcoin and other cryptocurrencies based on blockchain technology have, at least in part, achieved this goal, the real-world use of cryptocurrencies has also created new opportunities for intermediaries to facilitate the practical use of cryptocurrencies by consumers, businesses, and investors.

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