The term “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 licence for money transmission.
According to information published on December 19 by the law firm Cooley, Alaska revised its rules governing money transmission to include a definition of “virtual currency.” Virtual currency is defined as follows in the local Administrative Code amendment adopted by the Division of Banking and Securities (DBS):
Whether or not it is َdenominated in money, a digital representation of value that is used as a medium of exchange, unit of account, or store of value is not money.
The requirement to submit a licencing application for “a person engaging in money transmission activity involving virtual currency” is the most obvious effect of this change, which takes effect on January 1.
Other provisions of the amendment state that “virtual currency” will also be covered by the definitions of “monetary value” and “permissible investments.” Affinity and rewards programmes, as well as digital tokens used in online gaming, are still excluded from the definition of “virtual currency,” according to the Cooley analysis.
Even prior to the amendment, platforms that dealt with cryptocurrencies were required to obtain an Alaska money transmission licence. However, the previous 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 only 36 out of 50 states in terms of the adoption of cryptocurrencies.