On November 30, 2016, the Illinois Department of Financial and Professional Regulation (IDFPR) issued a proposed “Digital Currency Regulatory Guidance” (the Guidance) regarding the application of the Illinois Transmitters of Money Act (TOMA) to various digital currency activities. The Guidance applies only to “decentralized digital currencies,” which are not issued by a particular person or entity, do not have a central administrator, and do not have a central repository. Therefore, the Guidance would apply to activities involving Bitcoin and most other cryptocurrencies. The IDFPR is accepting comments on the Guidance until January 18, 2017.
In the Guidance, the IDFPR concludes that the transmission of digital currency by itself does not require a money transmission license under TOMA. TOMA requires a money transmission license for those who engage “in the business of receiving money for transmission or transmitting money,” and defines “money” as a “medium of exchange that is authorized by a domestic or foreign government as part of its currency….” Because the decentralized digital currencies to which this Guidance applies have not been authorized or accepted by any governments, it is not considered “money” for purposes of TOMA. Therefore, those who transmit digital currency by itself (without also transmitting traditional currency) are not in the business of “receiving money for transmission or transmitting money.” Under the Guidance, therefore, intermediaries who receive digital currency for transfer to a third party, and virtual currency wallets that hold digital currency on behalf of customers, would generally not be required to obtain a money transmission license.