Money Transmitter

A business entity that provides money transfer services or payment instruments.

A business entity that provides money transfer services or payment instruments.

What Is a Money Transmitter?

Money transmitters in the U.S. are part of a larger group of entities called money service businesses or MSBs.

Regarding cryptocurrencies, any U.S. business that deals frequently with crypto will be familiar with the concept of a money transfer license or money transmitter.

This is because, under U.S. federal legislation, cryptocurrency is counted as a commodity meaning that crypto falls under the remit of the Financial Crimes Enforcement Network, also known as FinCEN.

Regulators perceive crypto-related businesses as money transmitters.

Crypto-related businesses also fall under the Bank Secrecy Act (BSA), meaning such businesses must obtain a license in every state they operate, although the northwestern state of Montana is excluded from these rules.

These regulatory requirements can apply to a spate of cryptocurrency companies, including payment processors, cryptocurrency exchanges, Bitcoin ATMs and some cryptocurrency wallet providers to name a few.

In a guidance document published in 2013, named Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies, FinCEN clarified virtual currency and fiat money are subject to the same money transmission legislation.

According to FinCEN, a money transmitter is any individual who provides money transmission services or participates in the transfer of funds.

Hence, companies that accept cryptocurrencies from customers on behalf of a merchant or swapped virtual currencies for fiat money, fall into the definition of money transmitters.