The State of Colorado recently released a special guidance that will eliminate the need for money transmitting licenses in crypto exchanges in cases when no fiat currencies are being involved.
No Fiat Used — No License Needed
Only days ago, on September 20th, a new interpretive guidance regarding the Colorado Money Transmitters Act’s applicability was released by the Colorado Division of Banking. The guidance addresses the way that the Money Transmitters Act will affect crypto companies, and for once, it would seem that the news is actually a positive one.
The cooperation between Colorado AG’s office and the Division of Banking has taken months. Still, the two managed to come up with the helpful guidance that will allow crypto firms to make a step forward. It is expected to help the crypto firms that are trying to navigate the unregulated industry and make their business easier to develop.
According to what is known so far, the document touches upon the operations of these firms and determines if they need a money transmission license for such operations. The guidance, of course, will only include companies based in the State of Colorado. Apart from that, it will set some specific circumstances where the law of Colorado will require crypto firms to be in possession of a money transmission license.
However, the guidance also claims that the license won’t be necessary for making any transaction, as long as no fiat currency is involved in said transaction. Instead, the license will only be needed when a crypto/fiat transactions are being made, when one customer transfers the currency to another customer in the exchange, and when the exchange transfers fiat currencies by using cryptos as a medium.
If, however, one cryptocurrency is transferred from one user to another, as they can get during regular trading, the money transmission license will not be necessary.
An Example to Others
This kind of guidance was greeted with a lot of positivity, as the crypto community believes that it represents the step in the right way for cryptos in the US.
Colorado issues excellent guidance: non-fiat crypto activities do not require money transmission licensing. Well done, Colorado!! https://t.co/7HU4ieYz3D @DENStartupWeek @coloradogov @denbizjournal @coindesk @ShapeShift_io
— Erik Voorhees (@ErikVoorhees) September 21, 2018
Additionally, the guidance also allows Colorado to join Wyoming as one of the best blockchain tech jurisdictions in the entire US. The move is seen by many as extremely innovation-friendly and forward-looking. This is also why many are convinced that it will quickly attract digital economy pioneers and similar companies that require friendlier conditions.
It can only be hoped that the other states will see this as a proper example of how to improve and that their regulatory agencies will consider following in Colorado’s footsteps. Especially the strict jurisdictions that are not only not helping their crypto communities and businesses, but are actually making it almost impossible for them to function properly.