Money Transmitter

Understanding Money Transmitters

Money transmitters are a specific type of money service businesses (MSBs) operating within the United States.

When it comes to cryptocurrencies, businesses in the U.S. that frequently engage in crypto-related activities are well-acquainted with the concept of a money transfer license or money transmitter.

This is because, under U.S. federal legislation, cryptocurrency is classified as a commodity and falls within the jurisdiction of the Financial Crimes Enforcement Network (FinCEN).

Regulators categorize businesses involved in cryptocurrencies as money transmitters.

Crypto-related businesses are also subject to the Bank Secrecy Act (BSA), which mandates that they obtain licenses in every state they operate in, with the exception of Montana.

These regulatory requirements are applicable to various cryptocurrency companies, including payment processors, cryptocurrency exchanges, Bitcoin ATMs, and certain cryptocurrency wallet providers.

In a 2013 guidance document titled “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies,” FinCEN clarified that virtual currency and fiat money are subject to the same laws governing money transmission.

According to FinCEN, a money transmitter is an individual who offers money transmission services or participates in fund transfers.

Therefore, companies that accept cryptocurrencies from customers on behalf of a merchant or exchange virtual currencies for fiat money fall within the definition of money transmitters.