Money Transmitter
A person or entity engaged in the business of receiving money from one party for transmission to another; subject to federal registration as a money services business and to state-by-state licensing.
A money transmitter is a person or entity engaged in the business of receiving money or its monetary value (including virtual currency) for transmission to another person or location. Money transmitters include traditional remittance providers, payment processors operating in certain capacities, peer-to-peer payment apps, and many cryptocurrency businesses. Some state statutes, including Texas's, also treat selling or issuing stored value as money transmission, while FinCEN regulates providers and sellers of prepaid access as separate categories of money services business.
Money transmitters are regulated at both the federal and state level. Federally, money transmitters are a category of "money services business" (MSB) and must register with the Financial Crimes Enforcement Network (FinCEN) under the Bank Secrecy Act. As MSBs, they are also subject to anti-money-laundering obligations, including customer identification, transaction monitoring, and suspicious activity reporting.
Most U.S. states (Montana being a notable exception) require money transmitters to obtain a state license. The licensing requirements vary substantially by state and typically include net worth, surety bond, financial reporting, and ongoing examination requirements. The Conference of State Bank Supervisors has worked to harmonize state licensing through its model Money Transmission Modernization Act, but state-by-state licensing remains the practical reality.
Texas requirements
In Texas, money transmission is regulated by the Texas Department of Banking under the Money Services Modernization Act, codified at Tex. Fin. Code Chapter 152. Texas requires a money transmission license, surety bond, and ongoing reporting. Chapter 152 defines monetary value to include a stablecoin that is pegged to a sovereign currency, fully backed by reserves and redeemable for sovereign currency. Whether other virtual currency activity requires a license depends on the transaction, and the Texas Department of Banking has issued guidance on the question.