Alaska Updates Money Transmission Law as States Broaden Oversight of Virtual Currency

Alaska has joined a growing wave of states modernizing their money transmission laws to bring virtual currency businesses more squarely within existing financial regulatory frameworks.

The state’s new law, Senate Bill 86, enacted June 30, replaces Alaska’s existing money transmission statutes with a comprehensive modernization framework that expands licensing requirements to virtual currency activities. The legislation comes as states seek to update money transmitter laws originally designed for traditional payment providers to address cryptocurrency exchanges, digital wallet providers and other virtual asset businesses.

Unlike digital asset legislation focused primarily on consumer protection or cryptocurrency investment, Alaska’s overhaul centers on modernizing the regulatory framework governing businesses that move money or virtual currency on behalf of customers. According to an analysis by business law firm Sheppard Mullin, the law updates licensing, financial, consumer protection and supervisory requirements while bringing Alaska into closer alignment with nationwide licensing practices.

One of the law’s most significant changes, per Sheppard, is its expansion of the definition of “money transmission” to include virtual currency exchange and virtual currency business activity. Covered activities now include exchanging, transferring, storing or administering virtual currency on behalf of another person, extending licensing obligations to a broader range of digital asset businesses.

The legislation also establishes a series of operational requirements tailored to virtual currency providers. Licensed firms must provide customers with disclosures covering fees, insurance coverage, transaction risks, error resolution procedures and account changes. They also must maintain sufficient quantities of each type of virtual currency to satisfy customer entitlements, effectively requiring firms to maintain reserves matching customer holdings.

Beyond crypto-specific provisions, Alaska modernizes its licensing and prudential standards by authorizing use of the Nationwide Multistate Licensing System for applications, renewals, reporting, background checks and changes of control. The law also introduces risk-based surety bond requirements of up to $1 million.

Alaska’s approach mirrors developments in several other states that have recently revised their money transmission laws to address evolving payment technologies and digital assets.

Colorado enacted its Money Transmission Modernization Act earlier this year, per Sheppard, replacing its previous law with a framework modeled on standards developed by the Conference of State Bank Supervisors. The Colorado law broadens the definition of regulated activity to encompass digital money movement and payroll processing, expands supervisory coordination through multistate examinations, updates change-of-control requirements and strengthens consumer disclosure obligations.

Connecticut adopted an even broader overhaul in 2025, expanding licensing requirements to digital wallets and app-based money transmission while imposing one-to-one reserve requirements for virtual currency custody. The law also requires comprehensive transaction disclosures, restricts the use of third-party custodians, limits the state’s own use of digital assets and establishes parental verification requirements for minors using money-sharing applications.

Pennsylvania has likewise moved to regulate virtual currency transmission under its Money Transmitter Act by requiring licenses for businesses transmitting virtual currency for compensation. The law establishes a statutory definition of virtual currency, exempts most self-custodied wallets while regulating compensated third-party transmission, and creates a business-to-business exemption for certain commercial transactions. According to the Sheppard, Pennsylvania’s enactment made it the 27th state requiring licensure for virtual currency transmission.

Taken together, the state initiatives illustrate an emerging consensus around extending traditional money transmitter regulation to digital asset activities while coordinating oversight through common multistate licensing standards. For payment companies, cryptocurrency exchanges, wallet providers and virtual asset custodians operating across multiple jurisdictions, the trend points toward harmonized licensing expectations along with more detailed requirements governing reserves, consumer disclosures and compliance programs. Companies serving Alaska residents should evaluate whether the new law alters their licensing obligations and review their disclosure practices, reserve policies, bonding, reporting and recordkeeping procedures before the new framework takes effect.