San Jose, CA asked in Securities Law for California

Q: Would this business require a money transmitter license or be exempt?

Based on FinCen determinations in FIN-2014-R004, R005 and R006, would this business process be considered an exemption from being a money transmitter?

Consumers that want to purchase products/services using cryptocurrency can pay us to make the purchase for them. They identify what they want to buy and pay us the amount of the purchase (plus a fee) in cryptocurrency. Once we receive the cryptocurrency, we purchase the products for the consumer and they receive their purchase directly from the merchant.

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1 Lawyer Answer
Alan Abergel
Alan Abergel
  • Securities Law Lawyer
  • Fort Worth, TX
  • Licensed in California

A: You will need to retain an attorney to review your business model to determine if it is subject to FINCEN registration and regulation and/or other financial regulation. You may also be required to obtain a money transmission license from each state or country in which you conduct business and/or serve its customers. For example, California licenses and regulates its money transmitters through the Department of Business Oversight. There may be other financial (or other business industry) regulation and licensing that may apply to your business model.

This cannot be responded to properly in a short sentence and without a comprehensive analysis of your business model and rending of a business model legal opinion. You need to take the approach of “an ounce of prevention is worth a pound of cure.” It is much better to retain an attorney now to let you know the type of licensing and financial regulation that applies to your business model (and assist you in complying with these laws) than to retain an attorney to defend you/your company against administrative agencies’ enforcement actions and also potentially civil and criminal actions.

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