Pennsylvania Act 7 of 2025: A Comprehensive Legal Guide for Cryptocurrency Businesses
In June 2025, Pennsylvania enacted Act 7 of 2025, a landmark update to the state’s Money Transmitter Act that formally brings cryptocurrency businesses into the state’s financial‑services regulatory perimeter. For the first time, Pennsylvania law explicitly treats virtual currency as “money” and requires many digital‑asset businesses to obtain a money transmitter license from the Department of Banking and Securities (DoBS) when transferring cryptocurrency “for a fee.”
This guide provides a clear, practical overview of the law and explains what it means for exchanges, custodians, payment processors, ATM operators, and other digital‑asset service providers.
1. What Act 7 of 2025 Does
Virtual Currency Is Now Treated as “Money” Under Pennsylvania Law
Act 7 resolves years of ambiguity by defining virtual currency as money for purposes of the state’s Money Transmitter Act. This means that any business that receives, transmits, stores, or transfers cryptocurrency on behalf of another person may fall within the definition of a money transmitter.
Before Act 7, Pennsylvania took the position—through informal guidance—that virtual currency alone did not trigger money‑transmitter licensing. Act 7 reverses that position and codifies a much broader regulatory scope.
Money Transmitter License Required for Crypto Transfers “for a Fee”
Act 7 requires a money transmitter license when a business:
- Transfers cryptocurrency for a fee,
- Holds or controls crypto on behalf of customers,
- Facilitates the movement of crypto between persons, or
- Provides custodial or hosted‑wallet services.
This aligns Pennsylvania with states like New York, California, and Illinois, which already regulate crypto businesses through money‑transmitter or virtual‑currency licensing regimes.
Oversight by the Department of Banking and Securities (DoBS)
Licensed entities must comply with the same regulatory expectations as traditional money transmitters, including:
- Net‑worth and bonding requirements
- Anti‑money‑laundering (AML) and KYC programs
- Cybersecurity and operational controls
- Examinations and ongoing reporting
- Consumer‑protection obligations
DoBS now has explicit authority to supervise cryptocurrency businesses, conduct audits, and enforce compliance.
2. Who Must Comply
Act 7 applies broadly to businesses that touch customer funds or facilitate crypto transfers. Entities likely to require a license include:
• Centralized cryptocurrency exchanges
Any exchange that holds customer assets, executes transfers, or charges transaction fees will almost certainly require licensure.
• Custodial wallet providers
If a business controls private keys or can move customer assets, it is engaged in money transmission.
• OTC desks and brokers
Brokers facilitating crypto transfers between counterparties for compensation fall within the statute.
• Payment processors and merchant‑service providers
Businesses enabling merchants to accept crypto payments or converting crypto to fiat on their behalf are now regulated.
• Crypto ATM / kiosk operators
If the operator transfers crypto to or from customers for a fee, a license is required.
• DeFi platforms with centralized components
If a platform has custody, fee‑based transfer functions, or administrative control, it may be captured.
3. Who May Be Exempt
Certain entities may fall outside the scope of Act 7, depending on their business model:
• Non‑custodial wallet software providers
If the provider never takes possession of customer assets and cannot initiate transfers, it may not be a money transmitter.
• Validators, miners, and staking participants
These activities generally do not involve transferring assets “for a fee” on behalf of others.
• Purely peer‑to‑peer marketplaces
Platforms that do not handle customer funds or execute transfers may be exempt.
However, exemptions are narrow, and businesses should seek legal review before assuming they are outside the law.
4. Impact on Cryptocurrency Businesses
Act 7 has significant operational and strategic implications for digital‑asset companies.
A. Increased Compliance Costs and Licensing Burdens
Obtaining a Pennsylvania money transmitter license is a substantial undertaking. Businesses must prepare:
- Detailed compliance policies
- AML/KYC programs
- Audited financial statements
- Background checks for control persons
- Surety bonds
- Cybersecurity documentation
For startups and early‑stage crypto companies, these requirements may be resource‑intensive.
B. Multi‑State Licensing Becomes More Complex
Because Pennsylvania now treats crypto as money, businesses operating nationally must add Pennsylvania to their multi‑state licensing strategy. This may require:
- Expanding compliance teams
- Implementing state‑specific controls
- Coordinating with the Nationwide Multistate Licensing System (NMLS)
Companies that previously relied on Pennsylvania’s permissive stance must now adjust.
C. Heightened Enforcement Risk
DoBS now has clear statutory authority to:
- Investigate unlicensed crypto activity
- Issue cease‑and‑desist orders
- Impose civil penalties
- Refer cases for criminal prosecution
Businesses operating without a license face significant legal exposure.
D. Competitive Advantage for Licensed Entities
While licensing is burdensome, it also creates market credibility. Licensed businesses may benefit from:
- Greater consumer trust
- Ability to partner with banks and fintechs
- Access to institutional clients
- Reduced regulatory uncertainty
Compliance becomes a competitive differentiator.
E. Impact on Innovation and Market Entry
Act 7 may slow entry for smaller or emerging crypto businesses that lack the resources to meet licensing requirements. Some companies may:
- Avoid serving Pennsylvania customers
- Shift to non‑custodial or decentralized models
- Seek partnerships with already‑licensed entities
At the same time, the law provides clarity that may encourage institutional adoption and investment.
5. Practical Steps for Businesses
Crypto companies operating in or serving customers in Pennsylvania should:
- Conduct a licensing assessment to determine whether their activities constitute money transmission.
- Review custody models, especially if the business holds private keys or can initiate transfers.
- Evaluate fee structures, since transferring crypto “for a fee” is a key trigger.
- Prepare for NMLS registration and DoBS examination.
- Implement or update AML/KYC programs to meet state expectations.
- Consider restructuring to avoid custodial functions if licensing is not feasible.
Conclusion
Pennsylvania Act 7 of 2025 represents a major shift in the state’s approach to digital‑asset regulation. By treating virtual currency as money and requiring money transmitter licensing for crypto transfers conducted “for a fee,” the Commonwealth has aligned itself with a growing number of states imposing robust oversight on cryptocurrency businesses.
For companies operating in this space, Act 7 is both a compliance challenge and an opportunity. Those who adapt early will be best positioned to serve Pennsylvania customers, partner with financial institutions, and navigate the increasingly regulated digital‑asset landscape.
If your business needs guidance on Act 7 compliance, licensing strategy, or structuring digital‑asset operations, our firm can help you evaluate your obligations and develop a compliant, scalable approach.