Colorado Releases Strong Positive Guidance for Crypto Companies
On September 20, 2018, the Colorado Division of Banking released interpretive guidance addressing the applicability of the Colorado Money Transmitters Act to cryptocurrency companies. The guidance is the result of many months of coordination between the Division of Banking and the Colorado Attorney General’s office, and is a helpful and welcome step forward for crypto companies attempting to navigate the current regulatory uncertainty surrounding the industry. The document provides clear and specific guidance that crypto companies can use in assessing their operations and determining whether a money transmission license is necessary for operations in the State of Colorado.
The guidance sets forth the specific circumstances under which Colorado law will require a crypto exchange to have a money transmission license. The guidance makes it clear that if no fiat currency is involved in the transactions, the state’s money transmission law is not implicated. According to the guidance, a money transmission license is necessary in Colorado when:
- A person is engaged in the business of selling and buying cryptocurrencies for fiat currency; and
- A Colorado customer can transfer cryptocurrency to another customer within the exchange; and
- The exchange has the ability to transfer fiat currency through the medium of cryptocurrency.
Additionally, the guidance states that facilitating direct transfers of cryptocurrency from one user to another user does not require a license.
With this guidance, Colorado joins Wyoming as among the best US jurisdictions for blockchain technology. This is the kind of forward-looking, innovation-friendly climate that will help states like Colorado attract companies and pioneer a new digital economy. Hopefully, this collaborative and thoughtful approach can be an example to other regulatory agencies in addressing these issues, as it represents a 180-degree difference from many more restrictive jurisdictions. ShapeShift will continue to monitor legislative developments in this evolving industry.