Recently, an association of state bank supervisors issued new guidance to clarify how money transmitters must calculate tangible net worth under the model legislation known as the Money Transmission Modernization Act (MTMA), particularly in relation to virtual currency assets. As previously covered by InfoBytes, Colorado, Illinois, Maine, South Dakota, Indiana, Tennessee and Texas are some of the states which have adopted the MTMA.
The guidance specified that, when determining the amount of tangible net worth required under Section 10.01, money transmitters holding virtual currency assets on their balance sheet must include all such virtual currency assets in total assets. However, when calculating a licensee’s tangible net worth, a virtual currency asset does not need to be subtracted from total assets if it has a corresponding customer liability denominated in the same virtual currency.
The guidance further stated that recognizing virtual currency as acceptable capital for the limited purpose of satisfying customer obligations supports the safe and sound operation of money transmitters. This guidance was limited to the implementation of Section 2.01(bb), which defined tangible net worth as the aggregate assets of a licensee excluding all intangible assets, less liabilities, in accordance with GAAP, and Section 10.01, which required licensees to maintain a tangible net worth of the greater of $100,000 or a tiered percentage of total assets.
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