Kansas and Cryptocurrency’s Rocky Relationship

Written by: Maria Russinovich

As cryptocurrency has quickly spread worldwide and become a hot topic in current events, many states are choosing to establish laws that would regulate digital currency. Whether it be Bitcoin or another form of crypto, the main question on the minds of state legislatures is how the currencies can be regulated, whether through taxation, money transmission licenses, or more. While some states welcome crypto with open arms, some states like Kansas are still wary of introducing purely digital money.

In 2014, the Kansas Office of the State Bank Commissioner determined that Kansas does not recognize cryptocurrency as “money.” The Office stated that “no cryptocurrency is currently authorized or adopted by any governmental entity as part of its currency, it is clear that cryptocurrency is not considered ‘money for the purposes of the (Kansas Money Transmitter Act).” Since this original statement in 2014, Kansas still has not recognized cryptocurrency or digital currency as “money” or as having any “monetary value” which has made regulating crypto very difficult. 

Despite the state not recognizing crypto as “money,” Kansas citizens and businesses still wished to engage in exchanges and deal with crypto, encouraging the Kansas government to set boundaries and offer guidelines to its citizens. On the topic of money exchanges, Kansas says, “the act of two-party currency exchange by itself is not covered by the KMTA regardless of whether it is sovereign currency being exchanged or virtual currency.” 

The State did note that even though two-party exchanges are not covered by the KMTA if a third party is involved in the currency exchange, the KMTA will deem it a “money transmission” and therefore subject to KMTA regulations. This means that the KMTA does not apply to decentralized currencies or peer-to-peer money. Still, if a sovereign currency is in the transaction (i.e., the American dollar), then the KMTA has power over the transaction. If there is purely a crypto-to-crypto exchange, the KMTA does not regulate; however, if it is a transaction and transformation of crypto-to-recognized “money,” then the KMTA’s regulations are in play. 

When the KMTA does have power over an exchange or transmission, many citizens wonder about the taxation on their money or whether crypto is viewed as personal property. Kansas notes that “digital currency” includes: digital money, electronic money, electronic currency, cybercash, virtual currency, Bitcoin, Ethereum, and cryptocurrencies (within blockchain or not.) Kansas does not view transaction fees for digital currency exchanges as a sale of tangible personal property and therefore are not subject to Kansas sales tax. However, if a part of the sale of tangible personal property is purchased with digital currency, a seller or retailer can then tax the whole gross of the sale. 

While Kansas is not a state with the most extensive cryptocurrency regulations, it has released warnings to its citizens, stating that “investors should go beyond the headlines and hype to understand the risks associated with investments in cryptocurrencies, as well as cryptocurrency futures contracts and other financial products where these virtual currencies are linked in some way to the underlying investment” (Coindesk, January 29, 2018). 

Cryptocurrencies are not going away anytime soon. It is essential to pay attention to the laws and regulations being put in place where you live, primarily if you exchange crypto for sovereign currency. Whether they are as stringent as Kansas or exceptionally well detailed, crypto regulations and laws will continue to change the crypto landscape as we know it. 


Kansas Provides Guidance on Taxation of Digital Currency. (n.d.). https://www.salestaxinstitute.com/resources/kansas-provides-guidance-on-taxation-of-digital-currency#:~:text=

Kansas Virtual Currency License. (2021, March 17). https://moneytransmitterlaw.com/cryptocurrency-state-laws/kansas/

State Regulations on Virtual Currency and Blockchain Technologies (Updated March 2021). (n.d.). https://www.carltonfields.com/insights/publications/2021/state-regulations-on-virtual-currency-and-blockchain-technologies-

Kansas Latest US State to Warn on Crypto Investment Risk. Retrieved from https://www.coindesk.com/kansas-latest-us-state-to-warn-on-crypto-investment-risk

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