In a bid to make the environment conducive for virtual currency exchanges, the state of Colorado has eliminated the need for a money transmission license for cryptocurrency exchanges.
However, the state’s Department of Regulatory Agencies has made some exemptions to this rule. i.e, the money transmission license will only not be scrapped if the crypto exchange deals purely on crypto to crypto trading or non-fiat trading.
“With respect to a person in the business of buying, selling or facilitating the transfer of cryptocurrencies for transmission or payment, a license would not be required since the person is not engaged in the sale or issuance of a negotiable instrument, and therefore not engaged in money transmission,” read a section of the new Interim Regulatory Guidance issued recently.
The regulatory guidance touches majorly on digital currencies and how the state of Colorado will handle the space in regards to regulations.
The Colorado Money Transmitters Act defines the licensing procedures that a person engaged in money transfer as a business should follow. The procedures seek to ensure those dealing in such activities are “above reproach”
The act constitutes money transmission to mean the sale or issuance of exchange or engaging in the business of receiving money for transmission whether in the United States “or to locations abroad.”
On his Twitter account, Erik Voorhees, the founder of ShapeShift, was positive about the move by Colorado’s Division of Banking saying that “Colorado issues excellent guidance: non-fiat crypto activities do not require money transmission licensing. Well done, Colorado!!”
Colorado’s bold move is putting the state as one of the preferred state for doing business not only as a cryptocurrency exchange dealing in non-fiat services but also for the general blockchain projects.
As Colorado scraps the need for a money transmission license for cryptocurrency exchanges, do you think other states will follow suit and make it friendlier to deal with cryptos?
Let us know your thoughts in the comments section below.
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