Money Transmitter Licensing

Currency and its exchange has evolved significantly throughout time.  Historically, gold was the currency of choice.  Movement away from the gold standard created a shift in the way governments valued and exchanged currencies.  As our technology advanced, electronic payments via credit and debit cards again shifted the way our currency is traded and stored.  We also witnessed the creation of a new form of currency abroad with the Euro, which was recognized as legal tender in 2002.  In our dynamic economy, we can count on continued change in the way we trade stored monetary value. 

To regulate and secure money transmission, both federal and state governments have implemented licensing regimes to control money transmission.  At the federal level, the US Department of the Treasury regulates and registers money services businesses via the Financial Crimes Enforcement Network (FinCEN).  The term "money services business" includes any person doing business in one or more of the following capacities: currency dealer or exchanger; check casher; issuer of traveler's checks, money orders or stored value; seller or redeemer of traveler's checks, money orders or stored value; money transmitter; or the U.S. Postal Service. [1]

States have also implemented money transmitter licenses.  State level license applications range in complexity and cost but most require significant asset and ownership disclosures, criminal background checks, costly bonds, and references.  Applications are often met with lengthy agency review timelines, imposing a barrier to entry for those who are not familiar with licensing requirements.  Penalties for non-compliance are severe, including criminal sanctions. 

The emergence of digital currency, also known as cryptocurrency, has yet again caused us to rethink traditional forms of currency and exchange.  Bitcoin entered the marketplace in 2009 and is gaining investors. [2]  CNN.com’s financial pundits continue to watch Bitcoin’s value soar, reporting bullish futures speculation in late 2017. [3]

In response to emerging digital currencies such as Bitcoin, many state regulators are now contemplating legislation to amend existing money transmission laws to include digital currency transmission under the more traditional money transmitter licensing regimes.  LicenseLogix tracks licensing changes within the money services industry for a full spectrum of money services clients.

If your business activity includes money transmission, learn more about how LicenseLogix can assist to ensure you are complaint.  Our industry knowledge , along with our compliance tools, help our clients navigate through this complex licensing arena at both the federal and state level.  Contact us today to learn more about our experience in this industry.  

[1] FinCEN Money Services Business Definition

[2] What is Bitcoin?

[3] Bitcoin Rally Continues as Futures Forecast Even Higher Prices