Money Transmitter Licensing

Money Transmitter Licensing Options: Direct Licensing

When is a Money Transmitter License Required?

State money transmitter licenses are generally required for businesses that engage in activities related to the transfer of money or monetary value. These can include but are not limited to:

  1. Money Transfers: This includes businesses that transmit or remit money domestically or internationally. These businesses are commonly known as money services businesses (MSBs) or money transfer operators (MTOs).
  2. Payment Services: Companies that offer services to facilitate payments on behalf of individuals, businesses, or government agencies may need a license. This could include companies facilitating bill payments, peer-to-peer transactions, merchant services, etc.
  3. Prepaid and Stored Value: Businesses that issue and sell prepaid or stored value cards (like gift cards or prepaid debit cards) may be subject to money transmitter licensing requirements.
  4. Currency Exchange: This includes businesses that facilitate or conduct currency exchange transactions, whether these are physical or digital currencies.
  5. Digital and Virtual Currencies: Businesses involved in transmitting, exchanging, or providing wallets for cryptocurrencies like Bitcoin may also need a money transmitter license. Regulatory treatment of these activities varies widely by state.
  6. Check Cashing: In some states, businesses that cash checks may be classified as money transmitters and require licensing.
  7. Money Orders and Traveler’s Checks: Businesses that sell or issue money orders or traveler’s checks might also require a money transmitter license.

Moreover, with the advent of cryptocurrency, and the general lack of laws government crypto-specific activities, individual States govern such activity under existing money transmitter laws, which, once obtain, will allow the license holder to:

  1. Crypto Exchanges: Exchange cryptocurrencies for traditional fiat currencies (like dollars or euros), and vice versa.
  2. Wallet Hosting: Offer wallets or other services that hold or store cryptocurrencies.
  3. Payment Gateway: Facilitate the purchase of goods or services with cryptocurrencies.

Forms of Money Transmitter Licensing

In addition to direct licensing, an business seeking to enter into the money transfer arena has three (3) additional options.

Authorized Agent

An authorized agent refers to a third-party business that is permitted to conduct money transmission services on behalf of a licensed money transmitter. This arrangement is also known as an “agent-principal” relationship. The licensed money transmitter (the principal) is responsible for obtaining the necessary state licenses to provide money transmission services. The authorized agent (the third-party business) can then conduct money transmission activities under the umbrella of the principal’s license.

This business arrangement is most common in the retail context. Many licensed money transmitters utilize a network of authorized agents in the form of retail locations to provide services such as money orders, bill payments, and wire transfers. This could include convenience stores, grocery stores, or check-cashing locations.


Money transmitter license sponsorship, also known as agent sponsorship, is an arrangement where a company that doesn’t have a money transmitter license partners with a company that does. In this arrangement, the licensed company (the sponsor) allows the unlicensed company (the sponsored or agent) to operate under its license. This is often used by fintech and other companies that need to transmit money as part of their business model, but either don’t have a license or choose not to obtain one because of the cost, time, and complexity involved in the licensing process. Under a sponsorship arrangement, the licensed money transmitter essentially ‘rents out’ its license to the sponsored company. The sponsored company is able to offer money transmission services as an authorized agent of the sponsor.

Money transmitter sponsorship is most common in the Fintech space. For example, an e-commerce platform that wants to facilitate payments between buyers and sellers may partner with a licensed money transmitter. The money transmitter handles the regulatory compliance, and the e-commerce platform operates under its license.

White Label

A white-label money transmitter arrangement is a partnership where a licensed money transmitter allows another company to use its platform and license to offer money transmission services under its own brand. In this setup, the licensed money transmitter provides the necessary technology, compliance framework, and regulatory oversight. It essentially ‘rents out’ its infrastructure to the partner company. The partner company then offers these services to its customers under its own brand, even though the services are actually being provided by the licensed money transmitter.

White-label arrangements can be an attractive option for companies that want to offer money transmission services but do not have the resources or desire to obtain a license and build their own compliant platform. This arrangement is most common in the context of banking. A tech company might partner with a bank or licensed money transmitter to offer branded banking services to its customers, even though the underlying platform and compliance functions are handled by the licensed money transmitter.

Direct Money Transmitter Licensing

Direct money transmission licensing refers to the process by which a company obtains a money transmitter license directly from the relevant regulatory authority. Direct licensing allows a company to operate independently, without needing to rely on a partnership with a licensed money transmitter. However, it also comes with significant responsibilities and costs, including the cost of the application process, the time and resources needed to comply with regulatory requirements, and the potential for penalties if the company fails to comply.


The Nationwide Multistate Licensing System & Registry (NMLS) is a platform that allows companies to apply for, update, and renew their money transmitter licenses in one or more states through a single application process. While NMLS streamlines the process of submitting applications, it’s important to note that the actual requirements for obtaining a license are determined by each individual state. At present, nearly all states have moved their licensing process to the NMLS.

While the application requirements will vary somewhat by state, the uniform elements include:

  1. Business Plan: This document should outline the nature of the business, its operational structure, marketing plans, financial projections, and other details that illustrate the company’s overall strategy and objectives.
  2. Company Information: Details about the company such as its legal name, any DBA names, state of incorporation or formation, physical address, contact information, and website.
  3. Ownership and Management Information: Information about the individuals who own and/or manage the company. This may include names, addresses, social security numbers, and professional background information. Owners and key personnel may also be required to undergo background checks.
  4. Financial Statements: Audited financial statements for the past few years, if available. If the company is a startup, it may need to provide a balance sheet as of the most recent quarter and projected financial statements for the next year.
  5. Minimum Net Worth and Surety Bond: Demonstrated minimum net worth, often ranging from $10,000 to several million dollars depending on the state and the applicant’s perceived creditworthiness. The amount of the bond varies by state but is generally meant to protect consumers in case the money transmitter fails to meet its obligations.
  6. AML/BSA Compliance: An anti-money laundering (AML) and Bank Secrecy Act (BSA) compliance program, including a designated compliance officer, policies and procedures, training program, and independent audit function.
  7. Description of Operations and Products/Services: Details about the nature of the money transmission services to be offered and the operational flow of funds.
  8. Authorized Agents: If applicable, a list of authorized agents or delegates that will be providing services on behalf of the applicant.


The cost to obtain a money transmitter licenses in each state varies, but in total can exceed $1,000,000 when factoring in application fees, surety bond fees, professional fees such as auditing and legal and various miscellaneous costs. The following provides an estimated overview of state application fees and estimated surety bond amounts for money transmitter license applications by state:

In addition, the applicant can assume accounting, auditing and consulting and/or legal fees. The amount of those fees will vary not only on the number of states being applied for but also the scope of existing operations.


The amount of time it takes to obtain a money transmitter license can vary significantly from one state to another and can depend on a variety of factors, including the completeness and accuracy of the application, the scope of current operations, the complexity of the application (think basic remittance vs. cryptocurrency exchange) and the volume of applications the state regulator is dealing with. Generally, you should be prepared for the process to take several months, and it can sometimes take a year or more.

Here is a rough estimate of time based for larger states based on my past experience:

  1. California: 9-12 months
  2. New York: 12-18 months
  3. Texas: 6-12 months
  4. Florida: 3-6 months
  5. Illinois: 3-6 months

Other Requirements

Net Worth

The net worth requirements for obtaining a money transmitter license can vary significantly from state to state. The requirements are designed to ensure that the money transmitter has sufficient financial resources to manage its operations and meet its obligations. Generally speaking, you will find that the more populous states have larger net worth requirements than less populous states. To wit:

  1. California: A minimum net worth of $250,000 is required, but this can increase up to $500,000 depending on the volume of money transmission activity.
  2. New York: A minimum net worth of $500,000 is required, but this can increase depending on the nature and scope of the business.
  3. Texas: A minimum net worth of $100,000 is required, but this can increase up to $1,000,000 depending on the volume of money transmission activity.
  4. Florida: A minimum net worth of $100,000 is required for the first location and $10,000 for each additional location up to a maximum of $2,000,000.
  5. Illinois: A minimum net worth of $35,000 is required for money transmitters that operate through authorized delegates, and $100,000 for those that do not.

Bank Accounts

Some states require that the money transmitter license applicant provide adequate proof of “suitable” bank accounts for conducting money transfer-related activities. It can be challenging for money transfer and cryptocurrency businesses to establish and maintain banking relationships, due to the regulatory scrutiny and perceived risk associated with money transmission activities. A recent example of the aversion to such activities can be found in the closure of Silvergate, Signature and Silicon Valley Bank. However, options – such as Metropolitan Community Bank, do exist but the process to open an account can be arduous and require a number of weeks of due diligence review by the financial institution.


While the process of obtaining money transmitter licenses can be expensive and time consuming, the long term value is easily ascertainable: higher margins. When compared to the alternatives of agency, sponsorship and white-label, all of which require an intermediary financial institution, the direct money transmitter licensing strategy has enormous long term benefits provided the promoter has the ability effectively scale the business while maintaining regulatory compliance.

About Adam Tracy

Adam Tracy is a payments expert and entrepreneur who specializes in payment systems, blockchain technology, digital currencies, and other emerging technologies. He is the founder of Blockrunner, LLC that provides consulting services to clients in the blockchain, payments and cryptocurrency arenas.

Tracy has been involved in the payments industry as an attorney, consultant and entrepreneur since 2005, while he was become an expert in blockchain and cryptocurrency since its advent in 2013. Tracy has worked with a wide range of clients, including startups, established businesses, and investor – both in the United States and worldwide. He has advised clients on a wide range of compliance, legal and operational issues related to payment transfer systems, crypto token generation and architecture, cryptocurrency exchanges, regulatory licensing, smart contracts, and other blockchain applications.

In addition to his consulting work, Tracy has founded several companies in the payments, blockchain and cryptocurrency space, including a digital asset hedge fund, licensed electronic money institution and a blockchain-based tokenization platform. He is also a proponent of decentralized finance (DeFi) and has been involved in various DeFi projects.

Tracy is also a frequent speaker and writer on blockchain and cryptocurrency topics. He has been featured in a wide range of publications, including Forbes, CoinDesk, and Bitcoin Magazine.

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