Money Transmitter License (MTL)
A U.S. state-level license required to legally transmit money on behalf of others, which many crypto exchanges must obtain in each state where they operate, including New York's specific BitLicense.
A Money Transmitter License is a license, issued and regulated at the U.S. state level, required for any business that transmits money on behalf of customers, a category into which many crypto exchange and custody activities fall. Because money transmission licensing is handled separately by each individual state rather than through a single unified federal framework, a crypto exchange operating nationally in the U.S. generally needs to obtain and maintain a separate license in most states where it serves customers, each with its own specific requirements around capital reserves, bonding, and compliance.
New York operates its own distinct licensing framework for crypto businesses specifically, commonly known as the BitLicense, which imposes requirements generally considered more stringent than a typical state money transmitter license, including specific cybersecurity, consumer protection, and compliance program standards tailored to virtual currency businesses. Obtaining and maintaining money transmitter licenses across many states is a significant compliance undertaking that smaller crypto businesses sometimes find prohibitively costly compared to a virtual asset service provider's (see Kaavon's "Virtual Asset Service Provider" glossary definition) obligations in jurisdictions with a more unified national licensing framework.
Examples
- A crypto exchange operating across the United States typically needs to obtain a separate money transmitter license in most individual states where it serves customers, rather than a single national license.
- New York's BitLicense imposes requirements generally considered more stringent than a typical state money transmitter license, specifically tailored to virtual currency businesses.