Virtual Money Is Now Included In Alaska’s Regulatory Framework

To use cryptocurrency in the state, businesses must apply for a new license starting in 2023.

The word “virtual currency” will replace it under Alaska’s rules on money transfers as of January 1, 2023. It would require businesses using digital currencies to apply for a state license for money transfers.

According to information published on December 19 by the legal firm Cooley, Alaska revised its rules governing money transfer to incorporate a concept of “virtual currency.” The Division of Banking and Securities (DBS) issued an amendment to the local Administrative Code that defines the virtual currency as follows:

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

The obligation to file a licence application for “a person participating in money transmission activity involving virtual currency” is the most evident effect of this legislation, which takes effect on January 1.

Other sections of the amendment state that virtual money will also be covered under the definitions of “monetary value” and “permissible investments.” The affinity and loyalty programs and digital tokens used in online gaming are still excluded from the definition of “virtual money”, according to the Cooley study.

Even before the legislation, platforms that dealt with cryptocurrencies were required to get an Alaska money transmission license. However, their earlier Limited Licensing Agreement (LLA) with DBS specifically disallowed the idea of virtual money. Thus, as of January 1, these LLAs will no longer be valid.

Alaska is still one of the nine states that exclude capital gains from taxation for investors. Washington, Wyoming, South Dakota, New Hampshire, Nevada, Texas, Tennessee, and Florida round out the list of others. But according to a recent study by Invezz, it ranks just 36th out of 50 states in terms of acceptance of cryptocurrencies.