Notice 23-BB-04-03/16/2023 — DISB to begin investigation of Bitcoin ATMs (superseded)

Bitcoin Research — Law, Regulation, Markets & Origins (2026)

States

Dc

2023-03-16

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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.

NOTICE
                                      23-BB-04-03/16/2023
 TO:          PROSPECTIVE ENTITIES THAT ENGAGE OR PLAN TO ENGAGE IN MONEY
              TRANSMISSION OF VIRTUAL CURRENCY BUSINESS IN THE DISTRICT OF
              COLUMBIA

 FROM:        KARIMA M. WOODS, COMMISSIONER

 DATE:         MARCH 16, 2023

 SUBJECT:     DISB TO BEGIN INVESTIGATION OF BITCOIN ATMS (BTMs) IN THE
              DISTRICT TO ENSURE COMPLIANCE WITH THE DISTRICT’S MONEY
              TRANSMITTER LAWS

As a follow-up to BULLETIN 22-BB-001-08/04 issued August 4, 2022, the DC Department of
Insurance, Securities and Banking (DISB) is issuing this Notice to remind industry participants
who are engaging in, or planning to engage in, money transmission with Bitcoin or other virtual
currency used as a medium of exchange, method of payment or store of value in the District.
Such participants must be licensed as a money transmitter in the District of Columbia. DISB will
begin actively investigating and monitoring compliance with licensing requirements for money
transmitters that operate Bitcoin Teller Machines (BTMs) in the District.

BTMs
BTMs allow customers to buy or sell cryptocurrency from miners or exchange markets. Some
BTMs allow for the creation of an online wallet for sellers, enabling them to sell cryptocurrency
from their cryptocurrency supply, or to integrate cryptocurrency with exchange markets.
Cryptocurrency wallets are pseudo-anonymous; transactions can be instantaneous and moved
to other cryptocurrency wallets including international exchanges. The owners or holders of
cryptocurrency are not readily identifiable despite the ability to track cryptocurrency
transactions through a public ledger. To that end, illegal actors use cryptocurrency wallets to
facilitate fraudulent schemes.

DISB Position on Entities Engaging in Bitcoin or Virtual Currency-Related Activity
DISB reinforces its position that transactions involving an entity taking custody or providing
storage of Bitcoin and other cryptocurrencies from BTMs and online transactions is engaging in
“money transmission.” Such entities require a money transmitter license to operate in the
District. Entities engaged in BTM activities in the District of Columbia without first obtaining a
money transmission license are in violation of D.C. Official Code § 26-1002. That company or
individual would be subject to civil action and regulatory enforcement action for engaging in
such violative conduct, and to criminal prosecution of a felony, which could result in a fine of
not more than $25,000, or imprisonment for not more than five years, or both in accordance
with D.C. Official Code § 26–1023 (c).

Please note that DISB does not view transactions where entities proposing to sell and buy
Bitcoin and other cryptocurrencies from consumers in exchange for cash payments via kiosks
and/or online transactions as engaging in the business of “money transmission.”

DISB Commitment to Monitoring BTM Activities
DISB is aware of illegal activity nationwide that involves the use of BTM’s to engage in
fraudulent activities; these fraudulent activities are intended to evade the money laundering
laws and regulatory framework surrounding money transmission. In collaboration with our
federal and state regulatory counterparts, DISB will continue to monitor the financial landscape
to ensure such activities are not occurring in the District of Columbia and District residents are
not at risk.

A prospective licensee is encouraged to explore, in consultation with its attorneys or advisors,
whether its business activities require a money transmitter license. Any entity engaged in
money transmission in the operation of a BTM and found not in compliance with the money
transmitter law will be subject to fines and penalties if they fail to apply for a money transmitter
license by April 21, 2023.

Questions or concerns regarding this Notice may be directed to the DISB Banking Bureau by
email at [email protected].

If you are a consumer who may have suffered financial harm in the use of a BTM, we encourage
you to contact DISB for assistance.

DISB Mission
Our mission is three-fold: (1) cultivate a regulatory environment that protects consumers and
attracts and retains financial services firms to the District; (2) empower and educate residents
on financial matters; and (3) provide financing for District small businesses.