IDFPR concludes that Digital Currencies are not to be Considered Money

The final submission of the IDFPR guidance based on the ITMA (Illinois Transmitter of Money Act)

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The IDFPR or the Illinois department of Financial and Professional Regulation has come to a final agreement of the “Digital Currency Regulatory Guidance” with conformity to the Illinois Transmitters of Money Act (205 ILCS 657) (TOMA). Based on the guidance, crypto/digital currencies are not money they are “authorized or adopted by a domestic or foreign government as a part of their currency”. And with this the Regulatory Guidance tells and highlights which developments or activities with relation to digital currency do and do not require a TOMA license.

“Any person or entity engaging in a transaction involving both digital currencies and money should request a determination from the Department on whether or not such activity will require a TOMA license.”

The IDFPR has established that businesses actively engaged in the transmission of “closed network loyalty and other points and/or game programs schemes” could possibly constitute as money transmission. Consequently, all pertinent businesses are encouraged by the IDFPR to “seek an individual licensing determination from the Department.”

Further, the department found that any third party exchange involving both digital currency and fiat money, including ATMs, are classified as “money transmission” and would result in the need for a TOMA license. However, ATMs that don’t involve third parties and only accommodate the sale of digital currencies through the operator are exempt, due to neither party partaking “in the business of receiving money for transmission or transmitting money.”

The department found that a number of activities such as the sale of goods using digital currency between two parties, transfer of digital currency, conversion of one digital currency into another, acceptance of digital currency for goods and services by merchants, mining, use of multi-signature software, and use of blockchain technology in and of itself all do not qualify as money transmission and therefore do not require a TOMA license.

Lastly, the department outlines permissible investments, net worth, and third-party processing requirements as they relate to TOMA.

The IDFPR’s guidance includes public replies proposed during a commentary period in January 2017 and follows the department’s Financial Innovation Initiative, which was focused exclusively on encouraging growth and innovation in the Illinois financial services industry.

Source ethnews

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