1. Understanding Virtual Currency Licensing in the United States
The Intersection of Money Transmission, Digital Assets, and Financial Regulation
In the U.S., there is no single federal “crypto license.” Instead, businesses must comply with federal registration rules and state-specific money transmission laws—a system that can be both fragmented and unforgiving.
Federal Oversight: FinCEN Registration as a Money Services Business
At the federal level, the Financial Crimes Enforcement Network (FinCEN) classifies many cryptocurrency activities as money services businesses (MSBs) under the Bank Secrecy Act (BSA).
This means companies that exchange, transmit, or store digital currencies must:
- - Register with FinCEN as an MSB
- Implement AML and KYC programs
- Maintain transaction records and submit Suspicious Activity Reports (SARs)
- Designate a compliance officer and conduct independent audits
Failure to register can result in severe civil and criminal penalties. SJKP LLP helps clients assess their classification, prepare filings, and design FinCEN-compliant AML frameworks that align with their business model.
State-Level Licensing: The Patchwork Challenge
Most U.S. states require money transmitter licenses (MTLs) for businesses that exchange or hold cryptocurrency on behalf of others. However, definitions vary widely:
- - New York mandates a BitLicense—one of the strictest virtual currency frameworks in the world.
- Texas exempts certain crypto activities not involving fiat.
- California, Florida, and Illinois apply broad money transmission rules.
SJKP LLP maintains a state-by-state database of licensing requirements and assists clients in identifying where and when registration is necessary.
Who Needs a Virtual Currency License?
You may need a license if your business:
- - Operates a crypto exchange or trading platform
- Provides wallet or custody services
- Processes crypto payments for third parties
- Issues or redeems stablecoins
- Facilitates crypto-to-fiat or crypto-to-crypto transfers
Even decentralized platforms may fall within regulatory scope if they exercise “control” or “custody” over customer assets.
2. Structuring and Obtaining a Virtual Currency License
From Regulatory Assessment to Operational Approval
Obtaining a license is not simply paperwork—it’s a comprehensive process involving due diligence, compliance design, and ongoing supervision.
Phase 1: Legal and Business Assessment
We begin by evaluating your business model to determine:
- Whether your activities trigger licensing in specific jurisdictions
- Which licenses or exemptions may apply
- The optimal entity structure for compliance and liability protection
Our attorneys prepare detailed regulatory opinions that clarify obligations and guide strategic decision-making.
Phase 2: Preparing and Filing the License Application
SJKP LLP assists in compiling all required materials, including:
- Business plans and compliance manuals
- AML/KYC program documentation
- Financial statements and capitalization evidence
- Background checks for executives and beneficial owners
We coordinate with regulators, respond to inquiries, and manage the full application process until approval is secured.
Phase 3: Post-Licensing Compliance and Supervision
Once licensed, companies must maintain ongoing compliance obligations—annual reports, transaction audits, and regulatory examinations.
We help clients build sustainable compliance infrastructure that supports growth while satisfying both federal and state regulators.
3. Operating Without a License: Risks and Penalties
The Cost of Non-Compliance in a Regulated Marketplace
Running a crypto business without proper authorization exposes founders and investors to significant legal consequences.
Enforcement Actions and Cease-and-Desist Orders
State regulators have issued dozens of enforcement actions against unlicensed crypto businesses. Violations may lead to:
- Cease-and-desist orders halting operations
- Monetary fines and forfeiture of profits
- Loss of bank accounts and payment partnerships
SJKP LLP represents clients in responding to such actions and negotiating settlements that preserve operational viability.
Criminal and Civil Liability
Under 18 U.S.C. §1960, operating an unlicensed money transmission business is a federal crime punishable by fines and imprisonment.
We provide immediate defense and compliance remediation strategies for businesses facing federal or state investigation.
Reputational Damage and Investor Risk
Lack of licensing can erode investor confidence and block access to banking services or venture funding. We help clients establish transparent compliance programs that inspire trust among regulators and stakeholders.
4. Specialized Licensing for Emerging Sectors
Adapting to New Frontiers in Blockchain Regulation
As digital finance evolves, new business models create novel licensing challenges. SJKP LLP provides tailored advice across emerging sectors.
DeFi and Decentralized Platforms
Even decentralized protocols may be considered money transmitters if they facilitate token swaps or custody. We help DAO and DeFi operators evaluate legal exposure and structure operations to reduce licensing risk.
Stablecoin and Payment Token Issuers
Stablecoin projects may trigger both money transmission and securities laws depending on reserve structures. We advise on obtaining necessary licenses, reserve disclosures, and compliance audits to meet regulatory expectations.
Custody and Wallet Providers
Wallet operators must safeguard user assets and adhere to consumer protection laws. SJKP LLP assists in obtaining trust charters, state MTLs, or other relevant approvals for secure and lawful custody operations.
5. Global Licensing and Cross-Border Considerations
Navigating International Compliance in a Fragmented Regulatory Environment
For multinational crypto businesses, licensing obligations extend beyond the U.S.
We guide clients through foreign registration frameworks, including:
- - EU’s Markets in Crypto-Assets Regulation (MiCA)
- UK Financial Conduct Authority (FCA) crypto registration
- Singapore’s Payment Services Act (PSA)
- Japan’s Financial Services Agency (FSA) licensing
Our team ensures seamless cross-border compliance and advises on structuring global entities to manage jurisdictional exposure efficiently.
6. Why Choose SJKP LLP for Virtual Currency Licensing
Strategic Insight. Regulatory Mastery. Enduring Compliance.
At SJKP LLP, we understand that licensing is the gateway to legitimacy in the digital asset ecosystem. Our Virtual Currency License Practice helps clients obtain the approvals that power innovation, trust, and growth.
We have guided exchanges, wallet providers, stablecoin issuers, and fintech startups through complex licensing processes across multiple states and countries. Our attorneys combine regulatory knowledge with practical business insight—translating compliance into a competitive advantage.
Whether you are launching a new crypto venture or expanding into regulated markets, SJKP LLP delivers the legal precision and strategic foresight you need to operate with confidence.
We don’t just secure licenses—we build the legal foundation for sustainable innovation in digital finance.
10 Jul, 2025
