A payments or crypto business with US customers deals with two layers of regulation. At the federal level, it registers with the Financial Crimes Enforcement Network (FinCEN) as a money services business (MSB). At the state level, it needs a money transmitter license from each state whose residents it serves. FinCEN registration does not replace state licenses and does not authorize money transmission in any state.
What Makes a Business an MSB
FinCEN defines MSBs in 31 CFR 1010.100(ff). The definition covers seven categories: dealers in foreign exchange, check cashers, issuers or sellers of traveler's checks or money orders, providers of prepaid access, sellers of prepaid access, money transmitters, and the US Postal Service.
For foreign exchange, check cashing, and traveler's checks or money orders, a business is an MSB only if it handles more than $1,000 for any one person on any day. Money transmission has no threshold. If you transfer funds for others, you are a money transmitter and an MSB, whatever the amount.
Money transmission means accepting currency, funds, or value that substitutes for currency from one person and transmitting it to another person or location by any means. This includes remittance services and payment apps that hold and move user balances. Under FinCEN's 2019 guidance on convertible virtual currency, it also includes crypto exchangers and administrators that accept and transmit value for customers.
Who Falls Outside the Definition
Five groups are either outside the MSB definition or exempt from registration.
Payment processors. A processor is exempt when it facilitates the purchase of goods or services, or the payment of bills, through a clearance and settlement system that admits only regulated financial institutions, under a formal agreement with the seller or creditor that receives the funds. All four conditions must be met.
Merchants. A business that accepts payment, including crypto, for its own goods and services is a user under FinCEN guidance.
Software and unhosted wallet providers that never take custody of customer funds or control customer keys.
Agents of another MSB, such as a store that sells money orders for an issuer. Agents are MSBs but do not register separately. The principal MSB lists them.
Banks and firms registered with the SEC or CFTC, which the MSB definition excludes.
These exemptions are narrow. If a processor lets users send funds to each other, or a wallet holds keys for customers, the business falls back inside the definition. Review the exemption each time your product adds a feature.
Foreign Companies Serving US Customers
Under FinCEN's 2011 rule, an MSB located outside the United States must register if it does business wholly or in substantial part within the United States. The rule applies even if the company has no US office or US agents. The company must designate a person in the United States to accept service of legal process and keep its records accessible to FinCEN.
Registration brings the full Bank Secrecy Act (BSA) program with it:
- a written anti-money laundering (AML) program with a named compliance officer, independent testing, and training;
- suspicious activity reporting;
- currency transaction reporting where cash is involved;
- recordkeeping.
These obligations apply to a foreign company's US business in the same way as to a domestic MSB.
What FinCEN Registration Does and Does Not Do
Registration is a filing. FinCEN does not vet the business before it appears in the MSB Registrant Search, and a listing is not an endorsement.
You file FinCEN Form 107 within 180 days of becoming an MSB and renew the registration every two years by December 31. The filing triggers the federal compliance obligations and gives banks and partners a record they can check. A bank onboarding an MSB confirms both the FinCEN registration and the state licenses the business model requires.
When a State Money Transmitter License Applies
State licensing follows the customer. You need a license in each state whose residents you serve, wherever your company is incorporated. Forty-nine states and the District of Columbia license money transmission. Montana is the only state with no money transmitter law.
The Money Transmission Modernization Act (MTMA), adopted in full or in part by a majority of states, has aligned net worth, surety bond, and permissible investment rules among the adopting states. Exemptions and crypto coverage still vary by state, and they decide whether you need a license at all. Bond and net worth amounts depend on the state and on transmission volume, which explains why the cost of a US MSB setup differs so much between business models.
Crypto adds another layer. New York requires a BitLicense for virtual currency business activity involving New York residents. Since July 1, 2026, California has required a license under its Digital Financial Assets Law (DFAL) to exchange, transfer, or store digital financial assets for California residents. Firms that filed a complete application by that date can keep operating while the California Department of Financial Protection and Innovation (DFPI) reviews it. Licenses held in other states do not change the California requirement.
Penalties apply at the federal level as well as the state level. Operating an unlicensed money transmitting business is a crime under 18 U.S.C. § 1960, punishable by up to five years in prison, whether or not the operator knew a state license was required. The same statute covers a money transmitting business that fails to register with FinCEN.
Where a Montana MSB Fits
Montana's lack of a licensing law is the basis of the Montana MSB structure: a Montana-incorporated company registered with FinCEN, with no state license to obtain at home.
The structure fits a business whose US activity stays within Montana. No other state's residents are involved, so no other state's licensing law applies.
A Montana entity gives no exemption from other states' laws. Once a Montana MSB serves residents of New York, Texas, or California, those states' licensing rules apply exactly as they would to a company incorporated anywhere else.
Who Should Not Rely on MSB Registration Alone
Three business models need more than FinCEN registration, with or without a Montana entity.
A consumer payments app launching across the US. It needs a state-by-state money transmitter licensing program, which FinCEN registration does not cover. The licensing plan sets the launch date.
A crypto platform with users in California or New York. The DFAL and the BitLicense apply on top of MSB registration.
A business that plans to take deposits or offer investment products. MSB status does not permit deposit-taking, checking or savings accounts, securities trading, brokerage, or investment advice. These activities require a bank charter or securities registration.
The guide to MSB requirements in the USA walks through the registration process and the compliance program it requires.
FAQ
Is FinCEN MSB registration a license?
No. It is a federal registration that FinCEN does not vet or approve in advance. It triggers Bank Secrecy Act obligations but does not authorize money transmission in any state. Each state issues its own money transmitter license.
Does a foreign company need to register as an MSB?
Yes, if it does business wholly or in substantial part within the United States, even without a US office. It must also designate a US agent for service of process and keep its records accessible to FinCEN.
Do I need an MSB registration to accept crypto as payment?
No. A merchant accepting crypto for its own goods or services is a user under FinCEN guidance. Exchanging crypto for customers, holding it for them, or sending it to third parties makes a business a money transmitter.
How long does it take to set up a US MSB?
With Equilex, FinCEN registration through a new Montana entity takes from one month. State money transmitter licenses follow each state's own review timeline and take longer, so your choice of states shapes the launch plan.
What happens if a business operates without registration or a license?
FinCEN can impose civil penalties for failure to register, and each day the failure continues counts as a separate violation. Failing to register and transmitting money without a required state license are both federal crimes under 18 U.S.C. § 1960. States can also bring their own enforcement action.
Equilex usually registers MSBs with FinCEN through a Montana entity and prepares the AML program the registration requires. If a client plans to operate in other states, for example Delaware or Wyoming, we can form the entity there as an exception. To check whether the structure fits your business model, contact us through the MSB registration in the USA page.
FAQ
Is FinCEN MSB registration a license?
No. It is a federal registration that FinCEN does not vet or approve in advance. It triggers Bank Secrecy Act obligations but does not authorize money transmission in any state. Each state issues its own money transmitter license.
Does a foreign company need to register as an MSB?
Yes, if it does business wholly or in substantial part within the United States, even without a US office. It must also designate a US agent for service of process and keep its records accessible to FinCEN.
Do I need an MSB registration to accept crypto as payment?
No. A merchant accepting crypto for its own goods or services is a user under FinCEN guidance. Exchanging crypto for customers, holding it for them, or sending it to third parties makes a business a money transmitter.
How long does it take to set up a US MSB?
With Equilex, FinCEN registration through a new Montana entity takes from one month. State money transmitter licenses follow each state's own review timeline and take longer, so your choice of states shapes the launch plan.
What happens if a business operates without registration or a license?
FinCEN can impose civil penalties for failure to register, and each day the failure continues counts as a separate violation. Failing to register and transmitting money without a required state license are both federal crimes under 18 U.S.C. § 1960. States can also bring their own enforcement action.
Equilex registers MSBs with FinCEN through a Montana entity and prepares the AML program the registration requires. To see whether the structure fits your business model, see MSB registration in the USA.
