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Legal Status of Cryptocurrency in the United States by State

The United States has had a hard time trying to figure out what it thinks of cryptocurrency. From bitcoin’s rocky start as the currency du jour of the black markets and of money launderers to the major exchange hacks of Mt Gox and others to the runaway price speculation the preoccupied the news cycle in 2017 and the resulting collapse, there have been a lot to worry about. Ten years after the advent of cryptocurrency, the nation still does not have a regulatory framework for virtual currencies.

This is complicated by the co-sovereign nature of the federal-state relationship. As some functions – such as licensing of money handlers – are delegated to the states, while others – such as the monitoring of securities – are shared, there tends to be confusion on the rules for crypto businesses. As this can and do change from state to state, it could be hard to know if one is complying of the law – especially if one is not familiar with the state. For some states, there tends to be confusion even on how to enforce their own rules.

As the United States is one of the largest crypto markets outside of China, it is important to understand cryptocurrency regulation in the United States and how the individual states’ rules affect how cryptocurrency can be used and access across the country.


Cryptocurrency in the United States

Cryptocurrency use is legal throughout the United States and all its territories. The Internal revenue Service recognizes cryptocurrency as property, subject to federal capital gains taxes. The U.S. Securities & Exchange Commission also recognizes cryptocurrencies – depending on their characteristics – as securities, requiring the seller to register the offering accordingly.

Complicating this is several court rulings that recognizes cryptocurrency as money. In the United States, money is defined as a verifiable record or tangible item that can be used as payment for goods and services or repayment for debts and which is a medium of exchange, a unit of account, a store of value, and a standard of deferred payment. While cryptocurrency does not need to meet the standards of legal tender or government approval to repay official debts, as money, it represents a de facto transfer of fiat monetary value.

Licensing money transmitters, such as banks and stock exchanges, is typically the purview of the individual states. This creates a problem where there is a different cryptocurrency policy for every state and territory in the Union. For example, Hawaii banned the commercial transfer of cryptocurrency in 2015 in response to the Mt Gox hack of 2014.

Mt Gox, the largest bitcoin exchange at the time, lost approximately 850.000 bitcoins through theft and mismanagement, resulting in a more than $450 million loss to its customers. While 200,000 bitcoins were recovered, Mt Gox handled 70 percent of all bitcoin transactions at its peak, representing a massive cratering in the bitcoin economy and community. The collapse in trust led many to abandon the cryptocurrency or to believe that it is unsustainable.

While many states discussed banning bitcoin at the time, Hawaii was the only one to carry through. While there have been discussions to roll back the ban, it has yet to happen. So, a cryptocurrency user in Hawaii can have cryptocurrencies, the user cannot spend them in a commercial transaction in the state, use a commercial service – like a managed wallet – to conduct a transaction, and cannot use an exchange to buy or sell cryptocurrencies. In effect, Hawaii has issued a de facto ban on cryptocurrency use in its state.

Hawaii is just the extreme of the diverse landscape of crypto rules that make up the United States. Some states require crypto businesses to register as money transmitters, requiring them to secure a money transmitter license. New York requires all crypto businesses – regardless of if it is a money transmitter or not – to secure a license. Other states exempt crypto businesses from the money transmitter licensing requirement. Montana does not require its money transmitters to be licensed, so there is no justification for state licensing of crypto businesses there.

To make sense of all of this, we have prepared a table of the current and proposed regulations and legislations for cryptocurrency, sorted by state. While we made every effort to be complete, there may be memos and policy decisions that were overlooked. However, this table reflects the legal status of cryptocurrencies in the states, as of January 29, 2019.


Legal Status of Cryptocurrency Businesses and Token Transfers by State

States Legislation/Legal Status of ICOs or Token Transfers Notes
Alabama Requires licensing SB173/HB215 (2017) – “The Alabama Monetary Transmission Act” — “governs non-banking entities that engage in the business of selling, issuing or otherwise dispensing checks or transfers of money on behalf of individuals who may regularly use these services.” Businesses are required to obtain a money transmitters license to perform cryptocurrency transactions in the state.
Alaska Legislation proposed HB 180 (2017) would define cryptocurrencies as “digital units of exchange that have a centralized repository…are decentralized, disruptive, open-source, math-based, peer-to-peer virtual currency with no central administering authority and no central monitoring or oversight.” If passed, crypto businesses would need a money transmitter license to conduct crypto transactions.
Arizona Regulated/legislation proposed HB 2417 (2017) makes signatures, electronic transactions, and blockchain contracts all legally valid. HB 2216 (2017) makes it illegal to use a blockchain-based firearm registry in the state.


SB 1091 (2018) would allow residents to pay their income taxes in cryptocurrencies. SB 1145 (2018) would redefine how capital gains are calculated for cryptocurrencies. HB 2602 (2018) would ban towns and cities from prohibiting crypto-mining in their borders. HB 2601 (2018) would have established a crypto regulatory framework for the state.

Arkansas No regulations/guidance
California Regulated/legislation proposed SB 843 (2016) recognized that a raffle ticket cannot be exchanged for cryptocurrency.


AB 2658 (2018) would make blockchain contracts and electronic signatures lawful. AB 1326 (2016) and AB 1123 (2018) would have created a “Virtual Currency Act” which would “prohibit a person from engaging in any virtual currency business, as defined, in this state unless the person is licensed by the Commissioner of Business Oversight.” The license would have cost $5,000.

Colorado Legislation proposed SB 86 (2018) would order the state’s Chief Information Security Officer to “develop and maintain a series of metrics to identify, assess, and monitor each public agency data system for its platform descriptions, vulnerabilities, risks, liabilities, appropriate employee access control, and the benefits and costs of adopting encryption and distributed ledger technologies.”
Connecticut Requires licensing HB 6800 (2015) requires businesses transmitting cryptocurrency to obtain a license from the Department of Banking. HB 77141 (2017) requires that license holders must always maintain reserves of the same amount and type of cryptocurrencies as those entrusted to them.


Proposed Bill No. 5001 (2018) would impose a fee on all transfer or trade of cryptocurrency in the state.

Delaware Regulated The Delaware Blockchain Initiative was established in 2016 to “embrace the emerging blockchain and smart contract technology industry, which can help the public and enterprises lower their transactional costs, speed up and automate manual processes, and reduce fraud.” SB 69 (2017) creates statutory authority for Delaware corporations to use blockchain records “for the creation and maintenance of corporate records, including the corporation’s stock ledger.”
Florida Regulated/legislation proposed HB 1379 (2017) defines virtual currency and prohibits the laundering of it.


HB 13577 (2018) would “implement protocols for issuing an optional electronic credential and procure a related technology solution.”

Georgia Regulated/legislation proposed HB 811 (2016) gave state regulators all power to create the rules and regulations for cryptocurrency transactions in the state.


SB 464 (2018) would require the state revenue commissioner to accept cryptocurrency for the payment of taxes and license fees.

Hawaii Banned/legislation proposed A 2014 memo states “DFI (Hawaii’s Department of Commerce and Consumer Affairs’ Division of Financial Institutions) licenses money transmitters in Hawaii and has not licensed any crypto-currency companies to do bitcoin exchanges, wallets or ‘mining’ activity. If companies are offering to transmit bitcoins, they are doing so in violation of Hawaii’s money transmitter laws.”


HB 1481 (2018) would establish a working group to study the best practices regarding the use of blockchain. SB 2853 (2018) and SB 3082 (2018) would define cryptocurrencies and establish rules for virtual money transmissions.

Idaho No regulations/guidance
Illinois Regulated/legislation proposed 2017 guidance from the Illinois Department of Financial and Professional regulation decreed that any person or business that solely transmit cryptocurrencies will not need a money transmitter license.


HB 5335 (2018) would allow any tax to be paid in cryptocurrency. HR 120 (2017) would create the “Illinois Legislative Blockchain and Distributed Ledger Task” to study the benefits of the creation of a blockchain-based recordkeeping and service delivery system.

Indiana No regulations/guidance
Iowa No regulations/guidance
Kansas Regulated 2014 guidance from the Office of the State Bank Commissioner states that a person or business solely engaged in the transmission of virtual currencies will not require a license from Kansas.
Kentucky No regulations/guidance
Louisiana No regulations/guidance
Maine Legislation proposed SB 950 would study the use of blockchain technology.
Maryland No regulations/guidance A 2014 memo from the Office of the Commissioner defers the state’s stance on cryptocurrency to federal policies.
Massachusetts Regulated 2014’s “Selected Opinion 14-004” dictates that bitcoin is exempt from foreign currency transmission regulations and bitcoin ATMs are not considered financial instruments.
Michigan Regulated Guidance from the Michigan Department of Treasury dictate that sales tax is due for any purchases made in cryptocurrency based on the value of the price at the time of purchase in United States dollars. The purchasing of cryptocurrency, however, does not incur sales tax.
Minnesota No regulations/guidance
Mississippi No regulations/guidance
Missouri Regulated In 2016, Missouri’s secretary of state issued a cease and desist order that states that selling bitcoin in any amount is the same as the unregistered selling of securities in the state.


A 2015 letter found that bitcoin purchased through an ATM “is not subject to Missouri sales tax because bitcoin is intangible property.”

Montana Regulated The Electronic Contributions Act was amended to require the reporting of cryptocurrency donations made through a payment gateway.
Nebraska Legislation proposed LB 691 (2018) would enact “Nebraska Virtual Currency Money Laundering Act,” which would define cryptocurrency under the Nebraska Money Transmitters Act. LB 695 (2018) would make blockchain contracts and electronic signatures lawful. LB 694 (2018) would ban municipalities from taxing or regulating blockchain technology. LB 987 (2018) would create a regulatory framework for cryptocurrency.
Nevada Regulated SB 398 (2017) banned municipalities from taxing blockchain activity and makes blockchain contracts and electronic signatures legally viable.
New Hampshire Regulated/legislation proposed HB 436 (2017) exempts businesses that solely transmit virtual currency from registering as money transmitters.


HB 552 (2015) would have required the state treasurer to create a plan to allow bitcoin to be used for state taxes and fees.

New Jersey Regulated/legislation proposed A 2015 memo issued by the New Jersey Division of Taxation stated that the state’s position on the taxation of transactions involving “convertible virtual currency.” It advised that any “seller and/or retailer of taxable goods or services that accept convertible virtual currency as payment must determine the fair market value of the currency in U.S. dollars as of the date of payment and charge the purchaser Sales Tax on the underlying transaction.”


AB 3433 (2017) – “The Uniform Fiduciary Access to Digital Assets Act” authorizes an “executor, agent, guardian, or trustee, under certain circumstances, to manage electronic records of decedent, principal, incapacitated person, or trust creator.”


AB 1906 (2018) would establish a regulatory framework through the “Digital Currency Jobs Creation Act.”

New Mexico Regulated HB 250 (2017) required money transmitters to be licensed. This does not specifically identify cryptocurrency businesses, creating confusion.
New York Requires licensing/legislation proposed 23 NYCRR 200 (2015) – “BitLicense” – created a regulatory framework for crypto businesses and requires a $5,000 license to transmit crypto transactions commercially in the state. The Department of Financial Services has issued additional guidance, emphasizing the importance of “effectively preventing and responding to fraud and similar wrongdoing” and stated that “effective measures must include implementation of a written policy to…identify an effectively prevent risk.” License holders are also instructed to report “any wrongdoing” to the Department of Financial Services.


AB 8780 (2017) would make blockchain records, electronic signatures, and blockchain records lawful and viable for commerce. AB 8792 (2017) would instruct the board of elections to study the use of blockchain technology for voting. AB 8793 (2017) would create a task force to study the use of blockchain for state recordkeeping. AB 8783 (2017) would create a task force to study the implications of widespread implementation of digital currency in the state. AB 9685 (2018) would create a task force to study the implication of a state-issued cryptocurrency on the state.

North Carolina Requires licensing HB 289 (2016) added cryptocurrency to the Money Transmitter Act, requiring cryptocurrency traders to obtain a license and meet additional insurance requirements.
North Dakota Legislation proposed SB 2100 (2017) would have established a “legislative management study” of cryptocurrency.
Ohio Regulated The Ohio Department of Public Safety ruled that bitcoin cannot be used to purchase alcohol. This is due to the agent in charge determining that bitcoin is not legal tender due to its fluctuation in value.
Oklahoma Regulated An official comment (2014) to Okla. Stat. Ann. Section 1-9-332 states that bitcoin transfers would not receive the same protections as money transfers.
Oregon Requires licensing SB 277 (2015) requires virtual currency exchanges to register as a money transmitter business and be licensed by the Department of Consumer and Business Services.
Pennsylvania Requires licensing HB 850 (2016) changed the state’s money transfer laws to include cryptocurrency businesses.
Rhode Island No regulations/guidance
South Carolina Requires licensing AB 266 (2016) requires money transmitters to be licensed, including cryptocurrency businesses.
South Dakota No regulations/guidance
Tennessee Regulated/legislation proposed Per the Bitcoin Center, “The Tennessee Department of Financial Institutions issued guidance on December 16, 2015 exempting cryptocurrency from the state’s money transmitter laws. ‘Because cryptocurrency is not money under the Tennessee Money Transmitter Act, receiving it in exchange for a promise to make it available at a later time or different location is not money transmission.’”


“Two bills were introduced to the state’s legislature in January 2018. If enacted into law, HB 1507 would recognize the legal authority to use blockchain technology and smart contracts in conducting electronic transactions and protects ownership rights of certain information secured by blockchain technology. HB 2093 would prohibit ‘trustees of any defined contribution plan or related investment vehicle established as a health benefit by the state insurance company from investing in cryptocurrency.’”

Texas Regulated Per the Bitcoin Center, “The Texas Department of Banking issued a guidance memo on April 03, 2014 establishing that ‘because cryptocurrency is not money under the Money Services Act, receiving it in exchange for a promise to make it available at a later time or different location is not money transmission.’ HJR 89 was introduced March 02, 2017 but died in committee. It proposed an amendment to the Texas Constitution regarding the right to own, hold, and use any mutually agreed upon medium of exchange.”
Utah Regulated/legislation proposed SB 175 (2017) modified the state’s Uniform Unclaimed Property Act to include cryptocurrency.


HRC 006 (2015) would allow residents to pay their state taxes with bitcoin.

Vermont Regulated/legislation proposed Per the Bitcoin Center, “Then-Governor Peter Shumlin signed HB 868 into law June 02, 2016 allowing for blockchain data to be used in the Vermont court system. The current Governor, Phil Scott, signed HB 182 on May 04, 2017 which updates the state’s money transmission rules with a definition for ‘virtual currency.’ The governor also signed SB 135 on June 08, 2017 which establishes a working group to study how blockchain technology could help the state.”


“Introduced January 03, 2018 and referred to the Committee on Economic Development, Housing, and General Affairs, SB 269 seeks to produce a regulatory framework for the use of blockchain technology.”

Virginia Regulated/legislation proposed Per the Bitcoin Center, “Signed by then-Governor Terry McAuliffe on February 02, 2017, HB 1608, or the Uniform Fiduciary Access Act, created the Uniform Fiduciary Access to Digital Assets Act which allows fiduciaries to manage digital property such as computer files, web domains, and virtual currency. A notice from the Virginia Bureau of Financial Institutions informs residents that the Money Order Sellers and Money Transmitters codes do ‘not currently regulate virtual currencies; however, to the extent virtual currency transactions also involve the transfer of fiat currencies.’”


“Joint resolution HJR 153 was introduced January 23, 2018 and is currently in the rules committee. The resolution would establish a subcommittee charged to study the potential implementation of blockchain technology in state recordkeeping, information storage, and service delivery.”

Washington Requires licensing/legislation proposed SB 5031 (2017) changed the money transmission laws to include crypto businesses.


HB 1045 (2018) would create additional licensing and enforcement provisions for money transmitters.

West Virginia Regulated HB 2585 (2017) defined cryptocurrency as money and banned its use for criminal activities.
Wisconsin Regulated A decision from the Wisconsin Department of Financial Institutions stated that existing currency transmitters or check processors could also transmit cryptocurrency, granted the company enters an agreement with the department.
Wyoming Legislation proposed Per the Bitcoin Center, “Two notable bills are making their way through the Wyoming legislature. HB 70 known as the ‘utility token bill’ would define a utility token, or ‘open blockchain token’ as neither traditional money nor a security and those who facilitate the exchange of utility tokens are not considered traditional brokers of securities. ‘The Bitcoin bill,’ or HB 19, would exempt cryptocurrency from the Wyoming Money Transmitters Act. Both bills passed a second reading on March 01, 2018 and are awaiting further action.”


“Three additional bills are currently being considered. HB 101 would update Wyoming’s Business Corporations Act to authorize corporations to use electronic networks or databases for the creation or maintenance of corporate records. HB 126  would allow for the creation of ‘series LLCs’ which are favorable to decentralized protocols. HB 111 would exempt cryptocurrency from Wyoming state property taxes. These three bills were also filed in February 2018.”

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