From 1 January 2023, companies dealing in crypto will have to obtain a money transmission licence in Alaska.
The word “virtual currency” will replace it in Alaska’s rules on money transmission as of January 1, 2023. It will require businesses using digital currencies to apply for a state license for money transmission.
According to information published on December 19 by the legal firm Cooley, Alaska revised its rules governing money transmission to incorporate a concept of “virtual currency.” Virtual currency is defined as follows under the local Administrative Code amendment authorized by the Division of Banking and Securities (DBS):
“[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.”
The most obvious impact of this change, which will come into force on Jan. 1, is the requirement to submit a licensing application for “a person engaging in money transmission activity involving virtual currency.”
According to other parts of the amendment, “virtual currency” will also be included in the “permissible investments” and the definition of “monetary value.”
Affinity and loyalty programs, as well as digital tokens used in online gaming, are still excluded from the definition of “virtual money,” according to the Cooley analysis.
Even prior to the legislation, platforms that dealt with cryptocurrencies were required to obtain an Alaska money transmission license. However, the prior version of their Limited Licensing Agreement (LLA) with DBS expressly disallowed the idea of virtual money.
Thus, as of January 1, these LLAs will no longer be valid. Alaska is still one of the nine states that exempt capital gains from taxation for investors. Washington, Wyoming, South Dakota, New Hampshire, Nevada, Texas, Tennessee, and Florida round out the list of others. However, a recent study by Invezz found that it ranks just 36 out of 50 states in terms of the adoption of cryptocurrencies.
