The Case for Preempting State Money Transmission Laws for Crypto-Based Businesses
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THE CASE FOR PREEMPTING STATE MONEY
TRANSMISSION LAWS
FOR CRYPTO-BASED BUSINESSES
Carol R. Goforth*
I. INTRODUCTION
Few industries are evolving as rapidly or as dramatically as
those involving payment systems.1 The recent advent and spread
of cryptocurrencies and associated trading platforms and ex-
changes,2 as well as ongoing improvements and innovations in
FinTech generally,3 ensure that this is going to continue for the
foreseeable future. Along with this rapid change has come a dy-
namic increase in the number and range of payment startups,4 a
development that has been recognized as likely to redound to the
* * Carol R. Goforth is a University Professor and the Clayton N. Little Professor of
Law at the University of Arkansas, in Fayetteville. She has decades of experience with cor-
porate, securities and business law issues in the U.S., and has recently published a growing
interest in crypto. She is the author of REGULATION OF CRYPTOTRANSACTIONS (West Aca-
demic, 2020).
1. There is no denying that adoption of mobile payments and banking is picking up
speed. Nearly 40% of U.S. consumers have now used at least one digital payment service,
... and more than 60% of consumers are already regular users of mobile banking app.
Richard Yao, The Evolution of Payments & What It Means for Financial Services, MEDIUM
(Jun. 14, 2018), [https://perma.cc/G94P-XMK5].
2. Payment businesses have gone through a revolution in the last few years. From
blockchain, and FinTech to Al and cryptocurrencies, the world of international commerce is
moving faster than ever. Ilker Koksal, The Rise of Crypto as Payment Currency, FORBES
(Aug. 23, 2019), [https://perma.cc/U22F-8NG7]. A trading platform or crypto exchange is
simply an online platform in which one kind of digital asset may be exchanged for another
based on the relative market values of the assets being traded. Some exchanges allow crypto
to be exchanged for fiat currencies, although most trade only in cryptoassets.
3. Generally speaking, Fintech is technology that impacts the delivery of financial ser-
vices, and [i]f you were asked today to name one sector that has evolved so fast in the past
few decades, you'd not be mistaken to mention the financial space. Fintech - The Evolution
of Financial Technology, FINSMES (Jan. 31, 2019), [https://perma.cc/JZ33-44KT].
4. Within the last couple of years, FinTech and especially Payments has seen some
amazing companies emerge out of nowhere. Most notably are of course Stripe and Square,
which have been able to amass valuations of $9.2 and $18.9 Billion (valuation Tuesday April
3rd, 2018) respectively. Dwayne Gefferie, The New Business Model of the Payments In-
dustry, MEDIUM (Apr. 4, 2018), [https://perma.cc/LJG8-2L5Q] (emphasis in original).](ViewImageLocal?handle=hein.journals/arklr73&div=20&collection=&method=preview&ext=.png&size=3)
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The Case for Preempting State Money Transmission Laws for Crypto-Based Businesses
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