Crypto in Alaska (Everything You Need To Know)

As the largest state in the US by area, Alaska is also one of the least populated and the coldest regions within the country. Yet, it offers quite favorable conditions for cryptocurrency enthusiasts due to its zero income tax and a solidified legal framework for blockchain organizations.

This article aims to investigate the legal aspects of crypto in Alaska which can be useful for those wishing to relocate to this region.

Key Takeaways

• Definition of cryptocurrencies: The Division of Banking and Securities (DBS) in Alaska defines “virtual currency” as a digital representation of value to be used as a medium of exchange or store of value.
• Crypto taxes: Cryptocurrency earnings are not taxable since there is no income tax in the region.
• Despite favorable conditions, the number of local crypto businesses in Alaska is still low. Remote location and low density of population are the key reasons for that.

The Sentiment of Crypto in Alaska

With the proper regulatory framework for cryptocurrencies and a zero income tax, Alaska is, perhaps, one of the few truly crypto-friendly states in the US.

Not only does the state offer favorable conditions for cryptocurrency traders and investors. 

Its comparatively low electricity costs and cold climate create ideal conditions for those who want to make money via crypto mining. The clear regulatory framework, in turn, makes things easier for those who want to run a crypto business in this region.

The state even was the first to propose a blockchain-based voting system in 2021, though the initiative has never moved any further.

Yet, the low density of the population and the remote location of the state serve as a stop factor for businesses wishing to relocate. 

At the time of writing, CoinAtmRadar features only 16 Bitcoin ATMs in this region, with the majority residing in a single city, Anchorage. The availability of various cryptocurrency platforms makes the lives of crypto investors easier, though.

Crypto Regulation in Alaska

On January 1st, 2023, the state added “virtual currency” to its regulatory framework at the official level. 

The Division of Banking and Securities (DBS) regulating local financial institutions gave a clear definition to “virtual currency”. According to DBS, this is a digital representation of value that can be used as a medium of exchange or store of value.

As for the licensing regime, businesses dealing with crypto in Alaska had to obtain a money transmission license long before the amendments came into place. Yet, now the new rules include the notion of digital currency, thus fully legalizing related activities.

The initiative doesn’t come as a full surprise, though. The local lawmakers came forth with a relevant proposal back in 2017. Yet, only in 2023, they have managed to get their way.

How to Start a Crypto Business in Alaska?

As mentioned earlier, any business working with crypto in Alaska has to obtain the Money Transmitter License. In general, the steps to achieving this goal look as follows:

1. Meet the net worth requirements.

To launch an official crypto business in Alaska, applicants must first amass a company net worth of at least $25,000. To prove your solvency, prepare appropriate documents.

2. Get a business license.

The Alaska Department of Commerce, Community, and Economic Development grants business licenses to anyone wishing to launch a company in this region.

3. Get an account with the NMLS

To proceed with the license, it’s crucial to obtain an account with the Nationwide Multistate Licensing System (NMLS). This is exactly where one may submit a licensing request electronically.

4. Buy a safety bond

Also known as a surety bond, this financial instrument serves as a financial guarantee to complete a specific obligation. The sum that it covers must equal exactly $25,000.

5. Submit an application

Once you’ve made all the preparations, send an application through the NMLS portal. You will be required to provide the following information:

• An audited financial statement from a certified public accountant
• A business plan that includes such aspects as the list of products, marketing strategies, target audience, etc.
• A list of authorized agents that have permission to conduct financial operations on your behalf
• Alaska Money Services Affidavit with a signature and other required information
• Other documents required by the authorities

6. Pay a registration fee

Applicants have to pay a $50 fee to get a one-year license. Upon the renewal, the cast is the same.

Crypto Taxes in Alaska

In general, the US federal law treats cryptocurrencies as property and taxes them as investments or ordinary income. 

Yet, in Alaska, there is no state income tax. The rule applies to crypto earnings as well as to any other types of profits obtained by individuals.

Thus, one may freely make profits while investing or trading crypto in Alaska without having to share income with the government.

Crypto Businesses in Alaska

As mentioned above, remote location and severe climate are a serious obstacle preventing crypto companies from opening branches in Alaska. Therefore, it’s difficult to find crypto companies with offices in this region.

Some of the largest centralized exchanges such as Gemini, Kraken, and KuCoin are available to local citizens as well as to the rest of the US. Yet, hardly any platform has a permanent location here.

It’s worth adding, though, that in January 2024, Binance faced a regulatory ban in Alaska. The restrictions came right after the platform’s founder CZ pleaded guilty to violating AML requirements.

An interesting crypto-related insight refers to the state’s largest airline Ravn. In 2022, it created a digital asset FlyCoin to reward its customers. Unlike traditional rewards that many other airlines offer, these coins never expire. Yet, there’s no way to cash them out. You may only exchange them for goods and services that the company offers.

FAQ

Is Crypto Legal in Alaska?

Cryptocurrencies are not legal tender in this region. Yet, one may freely buy and sell them for trading or investment purposes.

Is Binance US Available in Alaska?

No, the platform doesn’t operate in the state anymore. The local government banned Binance after its founder CZ pleaded guilty.

What Do I Need to Start a Crypto Business in Alaska?

To provide services related to crypto in Alaska, you need an appropriate business license from the NMLS and a safety bond with a value of at least $25,000.

Are There Bitcoin ATMs in Alaska?

There are a few ATMs where you may buy crypto in Alaska. The majority of them reside in the city of Anchorage and are represented by two key providers: CoinFlip and Bitcoin Depot.