Virtual currency operators in Idaho are subject to state money transmission laws if they service Idaho residents, according to a letter from Jim Burns, investigations chief at the Idaho Department of Finance.
The letter was addressed to the CEO of a virtual currency exchange requesting clarification. The exchange's name is redacted in the published letter.
As it pertains to digital currencies, we believe that they are perceived and used as stores of value, says Burns in the letter.
The Idaho Money Transmitters Act defines the sale or issuance of open-loop stored value and prepaid access as payment instruments that fall under money transmission rules.
Additionally, we have historically opined that it is not necessary for a licensee to have a physical location in this state for our money remitter law to be in effect, Burns says.
This means Bitcoin exchangers and other digital currency companies and administrators will need to obtain a money transmitter license in the state.
While many states havent given formal opinions on virtual currency, its likely that states will go along with the Financial Crimes Enforcement Networks guidance issued in March.
Because getting nationally licensed is time-consuming and expensive, many Bitcoin businesses are looking into partnering with existing money transmitters to use their portfolio of state licenses. In this way, Bitcoin businesses primarily have to register with Fincen and build Anti-Money Laundering and Know Your Customer compliance programs.
Recently the Bitcoin Foundation met with Fincen and other regulating and law enforcement agencies in Washington D.C. to provide information about the disruptive virtual currency.