Transcribed from: https://youtu.be/ojua4OWJpyM
Bitcoin ATM regulation is constantly in flux, and I haven’t talked about it in a while, so I wanted to revisit the subject. So, with regards to any Bitcoin or cryptocurrency ATM, it always starts with federal registration as a money service business, right? So going through FinCEN, getting an MSB registration, which is a pretty straightforward, and as the name would imply, registration process as opposed to application, right? So it’s definitely a necessity because as I’ve discussed before, the definition of money transmitter at the federal level, encompasses all forms of virtual currency transmission, right? Which would include, in this case, Bitcoin and crypto ATMs. Now The States is a different story. In each state, you really have to look at where they are with their crypto-specific legislation. As a general rule though, however, if you’re looking at a state, you have to see how they’ve either defined currency or they’ve defined money transmission.
In many cases, in a State like Illinois, they’ll expand the definition of money transmission to include virtual currency and cryptocurrencies. Then, in some states, they’ll expand the definition of currency to include virtual currencies, right? So the majority of the states will require a money transmitter or a comparable license in order to maintain a crypto or a Bitcoin ATM. Some States like New Hampshire and some odd States out of the corner won’t require that, right? They won’t require an MTL license at this time, but that may change. So it is really a state-by-state analysis that you have to look to before you place your ATM in a particular area within the state. And one of the exceptions that you’ll see in States like Texas, and this jives with the federal legislation as it relates to money transmission, is: how you actually stock your ATM, right?
In many states, a money transmitter license in Texas being the best example of it. A money transmitter license is required where that ATM is connected to an exchange, right? Where the Bitcoin that I receive from the machine comes from a wallet hosted on a crypto exchange of any sort, right? And it doesn’t define crypto exchange, but it can be a lot of things, it can be a peer-to-peer exchange for that matter. That would require an MTL. But if the ATM is actually being stocked or funded by the owner of the ATM directly, then a money transmitter license is not required, right? So in many cases you have to look at the spirit and intent to see whether the source of the Bitcoin that’s coming out of those machines is exchange-funded or self-funded. Because that’s going to be the difference between whether or not you have to go through the process of getting a money transmitter license, which as I have discussed, can be a process unto itself: getting surety bonds, going through a licensure process with the state, going through background checks, going through the whole process that it requires.
But there’s beginning to be more clarity on the subject. And if you’re looking at traditional ATM laws, it’s not going to apply, because that deals solely with currency. So that’s the wrong place to look. What you really have to look at is the state money transmitter laws, how they’re either defining money transmission, right? To include virtual currency transmission, or if they’ve expanded the definition of money or currency to include virtual currency and cryptocurrency.
So that’s my take. Check me out. Adam Tracy, T-R-A-C-Y.io. Adam@Adamtracy.io, and I’ll talk to you later.
A former professional rugby player, Adam S. Tracy brings over twenty years’ experience as an attorney, consultant and dealmaker with a particular focus on cryptocurrency, digital products, payments and immersive corporate structures. As an accomplished executive and advisor to high risk merchants and stakeholders, Adam has proven himself as a results oriented, decisive leader with proven success advising early market entrants, technology adapters, as well as established participants across a wide range of verticals. Adam Tracy’s attack-first personality allows him to excel in dynamic, demanding environments including complex corporate negotiations, distressed environments and regulatory investigations.
In addition, Adam S. Tracy also has a successful track record co-founding high risk industry ventures, building & leading cross-functional teams, and spearheading diverse corporate transactions. A serial entrepreneur, Adam has successfully started and created exits across a wide swath of markets, including various mobile SaaS ventures, nutraceuticals, peer-to-peer payment systems, and several telemarketing-based ventures. Moreover, as a recognized expert in the payments field, Adam Tracy has been a blockchain and digital currency evangelist and influencer since the early days of Bitcoin.
Utilizing his proprietary “Pre-Event Driven™” strategy for decision making, Adam S. Tracy further leverages his over twenty years’ experience to create cost-effective, value-add solutions for each client. A data-driven acolyte, Adam continually refines his strategies based on field studies and data collection. Moreover, Adam Tracy further augments his range of solutions by actively networking with regulators, liquidity providers, legal and compliance experts, deal-flow brokers, investors and management of leading high risk industry ventures.
Adam S. Tracy earned his Bachelor of Science in Computer Applications and Bachelor of Science in Finance from the University of Notre Dame. He subsequently earned his Masters in Business Administration from the DePaul Kellstadt Graduate School of Business, while concurrently earning his Juris Doctorate from the DePaul College of Law. Adam lives outside Chicago with his with his wife, son, four dogs, and two cats.
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