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Alaska is adding a “virtual currency” to its regulatory system

Alaska is adding a “virtual currency” to its regulatory system

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Beginning January 1, 2023, the term “virtual currency” will take its place in Alaska’s money transmission regulations. It will require the companies that trade digital currencies to obtain a money-transmitting license in the state.

The state of Alaska amended its money transfer rules to include the definition of “virtual currency,” law firm Cooley reported Dec. 19. According to the local administrative code amendment adopted by the Division of Banking and Securities (DBS), the virtual currency is:

“[A] digital representation of value used as a medium of exchange, unit of account or store of value; and is not money, whether denominated in money or not.”

The most obvious impact of this change, which will go into effect on January 1st, is the requirement to submit a license application for “a person engaged in virtual currency money transfer activities”.

According to other parts of the amendment, virtual currency will also be included in the “permissible investments” and the definition of “monetary value”. However, as the Cooley analysis notes, affinity and rewards programs and digital tokens for online gaming still remain outside the “virtual currency” category.

Related: 4 Law Predictions for Crypto in 2023

Platforms dealing with crypto were even required to acquire Alaska’s money-transmitting license even before the change. But the previous nature of their Limited Licensing Agreement (LLA) with DBS specifically excluded the notion of virtual currency. Therefore, as of January 1st, these LLAs are obsolete.

Alaska remains one of nine states that still offer investors 0% capital tax gains. The others are Washington, Wyoming, South Dakota, New Hampshire, Nevada, Texas, Tennessee, and Florida. Still, it ranks only 36th out of 50 states in terms of crypto adoption, according to a recent study by Invezz.

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