Bitcoin ATM kiosks not subject to licensing under the MTA

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IN REPLY REFER TO: _________

FILE NO: _________

May 25, 2021

SENT BY EMAIL
 

Re: _________-Request for Interpretive Opinion re Bitcoin ATM Kiosks

 

Dear Mr. ­­­________:

Thank you for your letter dated May 10, 2021, to the Department of Financial Protection and Innovation (Department) on behalf of your company, _________ (____). The letter was assigned to me for response.

You inquire whether the sale and purchase of bitcoin through ATM kiosks operated by ____ is subject to the Money Transmission Act.[1]

FACTS

____ owns and would like to operate bitcoin ATM kiosks in California. These bitcoin ATM kiosks would allow customers to buy bitcoin in exchange for U.S. dollars. This is the only business ____ proposes to conduct in California, and the only subject of ____’s request for interpretive opinion.

Customers wishing to buy bitcoin at an ATM kiosk would enter required identification information, insert U.S. dollars in payment and specify the customer wallet to which the purchased bitcoin should be sent. ____ keeps the payment dollars inserted into the ATM kiosk and immediately sends the purchased bitcoin from ____’s wallet to the customer’s specified wallet. ____ hosts its own bitcoin wallet but does not host customer wallets. The transactions are between just two parties: ____ and the customer/bitcoin purchaser. No third parties are involved.

____ is registered with the Financial Crimes Enforcement Network (FinCEN).

ANALYSIS

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.[2]  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.

The sale and purchase of bitcoin from ____ through a bitcoin ATM kiosk does not meet the definition of “money transmission.”[3] Therefore, ____’s activities through its bitcoin ATM kiosks are not subject to licensing under the MTA.

The Department’s determination is limited to the activities described herein and does not extend to any other activities in which _____ may engage. Any change in the facts and circumstances or the products or services that _____ provides could lead to a different determination. 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 or state government.

Please contact me at ______________________________ if you have any questions.

 

 

Sincerely,

 

Manuel P. Alvarez

Commissioner

Department of Financial Protection and Innovation

 

By

/s/

Senior Counsel

_______

cc: Robert Venchiarutti, Department of Financial Protection and Innovation


[1] Fin. Code, § 2000 et seq.

[2] Fin. Code, § 2030, subd. (a).

[3] Fin. Code, § 2003, subds. (s), (x), and (u).

Last updated: Jul 22, 2021 @ 12:01 pm