On April 18 the governor of Washington signed into law amendments proposed by the Washington Department of Financial Institutions (“DFI”) in December of last year, to the state’s Uniform Money Services Act, including provisions specific to digital currency.  The changes take effect on July 23, 2017.

Aligning with Washington’s Interim Regulatory Guidance on Virtual Currency Activities, published in December of 2014, the amendments do not broaden the scope of regulated activities relating to digital currency.  However, they provide clarity regarding the regulation of digital currency products that operate within a limited or closed universe.  For example, loyalty points programs and virtual currencies redeemable only on online gaming platforms are explicitly exempted from the licensing requirement, as are tokens issued in connection with a distributed ledger that do not operate as a medium of exchange.

In addition, digital currency exchanges and other companies offering digital currency products are permitted to include like-kind digital currency holdings as capital reserves to the extent obligated to consumers.

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