A company that issues, exchanges, holds or moves stablecoins for US customers needs two layers of permission. The first is federal registration with FinCEN as a money services business (MSB). The second is a money transmitter licence in each state where its customers are, because US states license money transmission one by one.
The GENIUS Act, signed into law on 18 July 2025, adds a third layer for one group only: stablecoin issuers. From its effective date, only a permitted payment stablecoin issuer may issue a payment stablecoin in the United States. Everyone else in the chain, from exchanges to payment platforms, continues to license under the state money transmission laws and FinCEN rules described below. Our guide to GENIUS Act compliance covers the issuer rules in depth.
This article sets out who needs which licence, what each regulator looks for, what a programme costs and how long it takes, so that a founder, compliance officer or country manager can plan a US launch with confidence.
Money transmission means receiving money or monetary value from one person and transmitting it, or promising to make it available, to another. US regulators treat a fiat-backed stablecoin that the holder can redeem at a fixed value as monetary value. Moving it for customers is therefore money transmission in most states.
The Texas Department of Banking states the test plainly in Supervisory Memorandum 1037: the licensing analysis turns on whether the stablecoin gives the holder a redemption right against the issuer for sovereign currency. Most other states reach the same result under their money transmission statutes, and FinCEN has applied MSB rules to convertible virtual currency businesses since its 2019 guidance.
A licensed position gives a stablecoin business three things it needs to operate: the legal right to serve customers in each state, the bank partners for fiat deposits and withdrawals, and a clean record when institutional clients carry out due diligence. Operating an unlicensed money transmitting business is a federal offence under 18 U.S.C. 1960 as well as a breach of state law.
FinCEN registration makes the business a money services business under the Bank Secrecy Act. It brings the federal anti-money laundering duties: a written AML programme, suspicious activity reports, currency transaction reports and record-keeping. Registration is filed electronically, carries no fee, must be made within 180 days of starting business and is renewed every two years. Our FinCEN MSB registration service covers the filing and the AML programme behind it.
Almost every state, together with the District of Columbia and the US territories, requires a money transmitter licence or an equivalent for this activity. Each state runs its own application, mostly through the Nationwide Multistate Licensing System (NMLS), and there is no automatic recognition between states. A California licence does not cover New York, and a Texas licence does not cover Florida.
| Layer | Regulator | What it covers |
|---|---|---|
| Federal MSB registration | FinCEN | AML programme, reporting and records under the Bank Secrecy Act |
| State money transmitter licence | State banking or financial regulator | Permission to transmit for residents of that state; net worth, bond and examinations |
| Digital asset licence | NYDFS (BitLicense), California DFPI (DFAL) | Virtual currency business with residents of that state |
| Permitted issuer approval | OCC, FDIC, Federal Reserve, NCUA or a certified state | Issuing a payment stablecoin under the GENIUS Act |
The GENIUS Act creates three routes to become a permitted payment stablecoin issuer: a subsidiary of an insured bank or credit union, a federal qualified issuer approved by the OCC (which includes non-bank companies), or a state qualified issuer approved by a state whose regime the Stablecoin Certification Review Committee certifies as substantially similar to the federal one.
The Act takes effect on the earlier of 18 January 2027 or 120 days after the regulators publish final rules. Regulators were required to issue those rules by 18 July 2026. They did not finalise them by that date: as at October 2026 the OCC (March 2026), FDIC, NCUA, Federal Reserve (September 2026), Treasury and FinCEN with OFAC have all published proposals, and none is final.
Section 5(h) of the Act overrides state charter and licensing requirements for a federal qualified issuer and for an approved bank or credit union subsidiary, so these issuers do not need state money transmitter licences to issue. A state qualified issuer from a certified state can serve customers in other states; host-state consumer protection laws still apply. A state qualified issuer may stay under its state regulator while it has up to $10 billion of stablecoins outstanding, and then has 360 days to move to federal oversight unless a waiver is granted.
| Business model | GENIUS Act | State money transmitter licence |
|---|---|---|
| Issuer (federal qualified) | OCC approval required | Not required for issuance |
| Issuer (state qualified) | Approval by a certified state | Home-state approval; serves other states under the Act |
| Exchange or broker | May only offer permitted stablecoins from 18 July 2028 | Required in each customer state |
| Custodial wallet | Custody only by a supervised entity (section 10) | Required in most states |
| Payment platform or on-ramp | May only offer permitted stablecoins from 18 July 2028 | Required in each sender state |
The practical result: an issuer has a federal choice to make before January 2027, while every intermediary still builds the familiar state-by-state programme.
An issuer that creates and redeems a payment stablecoin for US holders needs permitted issuer status once the Act takes effect. Until then, issuers operate under state law, typically through a New York trust charter or BitLicense and money transmitter licences in other states. The Treasury proposal of August 2026 would treat an issuer doing business in the United States as a digital asset service provider too, so its distribution activity is also in scope.
An exchange that holds customer funds and transfers stablecoins between users is transmitting money. It needs FinCEN registration and a licence in each state where it has customers.
A custodial wallet that controls the private keys for customers usually needs a licence. New York brings custody within the BitLicense expressly; other states assess custody case by case. Under section 10 of the GENIUS Act, custody of payment stablecoins and their private keys may only be provided by an entity supervised by a federal or state financial regulator.
A platform that converts dollars to stablecoins, or moves stablecoins between a sender and a recipient, needs a licence in the states where the senders are, wherever the platform itself is based. A transfer initiated by a California resident needs California authority.
A processor that accepts stablecoins from buyers and settles merchants in dollars, or the reverse, holds and transmits value for others and is licensed as a money transmitter.
The GENIUS Act definition of a digital asset service provider excludes a distributed ledger protocol itself. A business that runs a front end, controls customer funds or takes a fee for executing transfers is assessed on what it actually does, and centralised control usually brings it into licensing.
New York requires a BitLicense, or a limited purpose trust charter under the Banking Law, for virtual currency business with New York residents, including stablecoin transmission and custody. The NYDFS guidance of June 2022 for dollar-backed stablecoins issued by its licensees requires full reserve backing, redemption at par within two full business days, and monthly reserve attestations by an independent certified public accountant. The firm prepares the full New York BitLicense application to the NYDFS standard.
The Digital Financial Assets Law requires a licence from the Department of Financial Protection and Innovation for digital financial asset business with California residents on or after 1 July 2026. Applications are filed through NMLS. The DFAL also allows a stablecoin to be offered to California residents only if it meets the reserve and redemption standards the DFPI applies. A business already holding a California money transmitter licence should map which of its activities fall under each law.
Texas treats a stablecoin with a redemption right against the issuer as money or monetary value under its Money Services Act. A payment platform that moves such stablecoins for Texas residents needs a Texas money transmission licence even if it never handles fiat currency itself.
The Money Transmission Modernization Act (MTMA) is a model law from the Conference of State Bank Supervisors that aligns net worth, bonding, liquidity and change-of-control rules across states. CSBS reports that 31 states had adopted it in full or in part by April 2026, including California, Texas, Illinois, Georgia and Massachusetts. In those states the same core application package now serves most filings, which shortens a multi-state programme.
State regulators look for a business that can show where the money is at every point, who controls the company, and how it keeps customers' funds safe. The core package is consistent across states:
| Requirement | MTMA standard | Note |
|---|---|---|
| Tangible net worth | Greater of $100,000 or 3% of total assets up to $100 million | Lower percentages apply above $100 million |
| Surety bond | Greater of $100,000 or 100% of average daily transmission liability in the state | Capped at $500,000 |
| Permissible investments | Equal to outstanding transmission obligations | Held in cash, Treasuries and similar assets |
States outside the model law set their own figures, and New York sets capital case by case for each BitLicense applicant.
A stablecoin business is examined on the same Bank Secrecy Act duties as any money transmitter, applied to on-chain activity. The compliance officer or MLRO should be able to show each of these working before the first examination:
Issuers carry a further duty under the GENIUS Act: the technical ability to block, freeze and reject transactions that breach the law. FinCEN and OFAC proposed the detailed AML and sanctions programme rules for permitted issuers in April 2026.
An issuer must hold reserves of at least one dollar for every stablecoin in circulation. The GENIUS Act limits reserves to US coins and currency, deposits at insured banks, Treasury bills, notes and bonds with 93 days or less to maturity, overnight repurchase agreements backed by such Treasuries, government money market funds holding only these assets, and tokenised forms of them.
The issuer publishes the composition of its reserves on its website every month. A registered public accounting firm examines each monthly report, and the chief executive and chief financial officer certify it. An issuer with more than $50 billion outstanding also publishes annual audited financial statements. The Act prohibits paying holders any interest or yield, and requires a published redemption policy with clear timing and fees.
State regimes apply similar standards today. New York requires monthly attestations and redemption within two business days for stablecoins issued by its licensees.
The cost of a US programme is set mainly by the number of states, the net worth and bond each one requires, and the compliance team needed to run it.
| Item | Cost |
|---|---|
| FinCEN MSB registration | No fee |
| State application and licence fees | Set by each state, typically hundreds to several thousand dollars per state, plus NMLS processing fees |
| New York BitLicense application fee | $5,000 |
| Surety bonds | An annual premium charged by the surety, usually a small percentage of the bond amount |
| Net worth and permissible investments | Capital held in the business, not spent |
| Ongoing | Annual renewals, state assessments, examinations, analytics tools and compliance staff |
Taken together, a 10 to 15 state programme commonly needs a budget from several hundred thousand dollars to more than one million once capital, bonds and staff are counted. A full national footprint costs more. Our state-by-state money transmitter licence guide sets out the fees and bonds state by state.
| Step | Typical time | Basis |
|---|---|---|
| FinCEN MSB registration | Days to a few weeks | Electronic filing; no approval process |
| Single state licence (most states) | 3 to 6 months | After a complete NMLS filing |
| New York BitLicense | About 12 months | NYDFS publishes no service standard |
| 10-state programme | 9 to 15 months | Parallel filings using one core package |
| GENIUS Act issuer approval | 120 days | Regulator decides within 120 days of a substantially complete application |
The GENIUS Act sets the clearest timetable: a regulator must decide an issuer application within 120 days of receiving a substantially complete one, or the application is treated as approved. For state licences, the time is driven mostly by how complete the first filing is. A package that explains the on-chain flows, reserves and controls in the regulator's own terms moves fastest.
Most payment platforms start with the states that hold most of their customers and volume, usually including California, Texas, Florida and New York, then add states in waves. Each wave reuses the core package.
A business can serve some states through a licensed partner while its own licences are pending. The partner holds the customer relationship and the funds in those states, so the contract and the flow of funds have to match that.
An issuer, or an exchange serving retail customers across the country, usually needs national coverage. For issuers, the GENIUS Act now offers a federal route that replaces state licences for issuance, so the choice between OCC approval and a state charter is made first.
The right sequence depends on where customers are, the volumes by state, the capital available and the growth plan. The firm sets this out in a written licensing plan before any filing starts.
A licence application platform such as Hector keeps each state filing, its document set and the regulator's questions in one place. Further detail is on our US money transmitter licence page.
Most do. A company that holds or moves stablecoins for customers, provides custodial wallets or converts between dollars and stablecoins is transmitting money and needs FinCEN registration plus a licence in each customer state.
Yes. It was signed on 18 July 2025 and takes effect on the earlier of 18 January 2027 or 120 days after final regulations. As at October 2026 the implementing rules are still proposals.
Only for issuers. A federal qualified issuer or an approved bank subsidiary does not need state licences to issue, but exchanges, wallets and payment platforms still need state money transmitter licences.
FinCEN registration takes days to a few weeks. Most state licences take 3 to 6 months after a complete filing, a 10-state programme around 9 to 15 months, and a GENIUS Act issuer application must be decided within 120 days of a complete filing.
New York requires a BitLicense or trust charter, and California has required a Digital Financial Assets Law licence since 1 July 2026. Most other states apply their money transmission law to stablecoins.
Under the Money Transmission Modernization Act, adopted by 31 states in full or in part, net worth is at least $100,000 and the surety bond is $100,000 to $500,000. Other states set their own figures.
From 18 July 2028 a digital asset service provider may not offer or sell them to people in the United States, subject to the Act's limited exceptions.
Buckingham Capital Consulting has handled payments and digital asset licensing since 2013, obtaining FCA authorisations for firms including Nexpay, Orbital and Global Send, and prepares FinCEN MSB registrations, state money transmitter programmes and New York BitLicense applications for stablecoin businesses. The firm builds the AML, blockchain analytics and reserve controls that federal and state examiners review alongside the application.
Speak to an expert: WhatsApp +44 7563 115980, Telegram @buckinghamcapital or info@buckinghamcapitalconsulting.co.uk.
This article is general information, reviewed against the regulator’s published requirements on the date shown. It is not legal advice; the regulator’s current publications take precedence.