Purchase and Sale of Cryptocurrency
IN REPLY REFER TO: _________
FILE NO: _________
February 9, 2021
VIA EMAIL ONLY
Re: Request for Interpretive Opinion
Dear Ms. ________:
Thank you for your emails to the Department of Financial Protection and Innovation of December 10, 2020 and January 13, 2021. As Senior Counsel for the Legal Division, I have been assigned to respond to this matter. In your emails, you seek confirmation that your client, _______________ (“________”), is not required to obtain a license pursuant to the Money Transmission Act (“MTA”). 
As explained in your email of January 13, ________ offers its clients an opportunity to buy or sell cryptocurrency directly with ________ in exchange for fiat currency. If a client wishes to purchase cryptocurrency from ________, it submits a buy order. To effect the sale, ________ requests a fiat currency transfer from the client via ACH or wire transfer. Upon receipt of the fiat currency, ________ will deliver the cryptocurrency from its inventory to the client’s wallet.
For sales of cryptocurrency, the client places a sell order with ________ for a specified cryptocurrency. ________ requests a transfer of that cryptocurrency from the client’s wallet to ________’s wallet. Upon receipt of the cryptocurrency, ________ will transmit fiat currency payment to the client’s bank account.
You also explain that because all client transactions are directly with ________, there are no transmissions of client funds or cryptocurrency to third parties.
Under the MTA, a person may not engage in the business of money transmission in California unless the person is licensed, exempt from licensure, or an agent of a person licensed or exempt from licensure. Financial Code section 2003, subdivision (q), defines “money transmission” as: (1) selling or issuing payment instruments, (2) selling or issuing stored value, or (3) receiving money for transmission.
________’s activities are limited to buying and selling virtual currency. This does not require an MTA license because it does not involve the sale or issuance of a payment instrument, the sale or issuance of stored value, or receiving money for transmission. 
This opinion is based solely on the facts presented in your correspondence. Any changes in the facts or circumstances, as we understand them, could lead to a different conclusion. Nothing in this letter should be interpreted to relieve ________ from any obligations under the laws administered by FinCEN or any other agency of the federal government.
If you have any questions, please feel free to contact me at ____________or ________________.
Manuel P. Alvarez
Department of Financial Protection & Innovation
cc: Robert Venchiarutti, Deputy Commissioner, Money Transmitter Division
 The Department of Financial Protection and Innovation was previously the Department of Business Oversight.
 Fin. Code, § 2000 et seq.
 Fin. Code, § 2030, subd. (a).
 Fin. Code, § 2003, subds. (s), (x), and (u).
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