(Kitco News) - The U.S. state of Alaska has added the term “virtual currency” to its money transmission regulations, according to a report from the law firm Cooley published on Dec. 19.
Beginning on Jan. 1, 2023, the amended regulations will require companies that engage in virtual currency money transmission to, from, or within Alaska to obtain an Alaska money transmission license.
“The amended regulations also establish that virtual currency is a permissible investment, but only to the extent of a licensee’s virtual currency obligations to its customers (e.g., virtual currency custodied on behalf of such customers),” the report said.
Other changes made to the Alaska Administrative Code include a redefining of “permissible investments to include virtual currency for outstanding virtual currency denominated in the same currency,” and the addition of a definition of virtual currency, which includes an expanded definition of “monetary value” to include virtual currency.
The Alaska Division of Banking and Securities (DBS) has adopted a comprehensive definition of virtual currency as 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.”
Excluded from this definition are affinity and rewards programs and digital tokens related to online games, “provided certain conditions are met.”
The DBS adopted the new rule due to the fact that it did not have the jurisdiction to regulate virtual currency activity under the previously outlined money transmission statute.
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Prior to the adoption of this rule, companies that obtained a money transmitter license were obligated to enter into a Limited Licensing Agreement (LLA) with the DBS that required them to post the following statement that its license had not been issued for the licensee to transmit virtual currency: “Please note that this license does not cover the transmission of virtual currency.”
With the inclusion of virtual currency activity as a money transmission activity that requires a license, the DBS intends to phase out the LLA requirement and will void and remove any LLAs currently in effect from the Nationwide Multistate Licensing System record on January 1, 2023.
And companies that have previously engaged in virtual currency activity that was determined to not require an Alaska money transmission license have been directed to reevaluate their compliance position when the new rule takes effect if they transmit or custody virtual currency to, from or within Alaska.
According to research recently conducted by Invezz, Alaska ranks 36th in terms of crypto-readiness among U.S. states and is one of nine states that have zero Capital Gains Tax, “making them great places for people to invest in cryptocurrencies as they will be able to keep hold of any profits they make after paying the Federal rate of CGT,” Invezz said.
