State crypto rules: money transmitter licenses and the BitLicense

In the United States, the license a crypto business needs to serve the public usually comes from a state, not from Washington. Most states apply their money transmitter laws to crypto. Two of the largest, New York and California, have built licenses specifically for it.

Why do states license crypto companies?

A money transmitter is a business that takes money from one person and sends it to another. States license these firms to keep customer funds safe, and most treat a company that holds or moves customers' crypto the same way.

No federal agency licenses exchanges for ordinary trading, so a crypto exchange operating nationwide may need dozens of state licenses. To narrow the differences, state regulators wrote a model law, the Money Transmission Modernization Act. As of September 2026, 31 states had adopted it in full or in part, according to the Conference of State Bank Supervisors.

State licensing is separate from the federal duty to register with FinCEN under anti-money-laundering rules.

What is the BitLicense?

The BitLicense is New York's crypto license, created by a Department of Financial Services regulation in June 2015. A business needs one to transmit, hold, buy and sell, exchange or issue virtual currency for New York residents. Individual investors do not, and neither do merchants that simply accept crypto as payment.

Critics have long said the cost and slow pace of New York approvals keep smaller firms out of the state. Supporters say strict vetting protects customers.

What does California require?

California's Digital Financial Assets Law was signed in October 2023. Its licensing requirement was first due on July 1, 2025, was delayed by a year, and took effect on July 1, 2026. A company that exchanges, transfers or stores crypto for California residents must hold a license from the Department of Financial Protection and Innovation, or have applied for one. Firms with applications under review can keep operating, according to the law firm Jones Day. Banks, and businesses handling less than $50,000 a year, are among those exempt.

The law also covers bitcoin ATMs. Operators may not take in or pay out more than $1,000 a day per customer.

Are states working together?

Increasingly, yes. On October 1, 2026 New York's regulator and the Wyoming Division of Banking agreed to coordinate examinations. They will also offer faster licensing to firms with a clean three-year record in the other state, according to the law firm Lowenstein Sandler.

Federal law is redrawing the boundary too. Under the GENIUS Act, a state can supervise smaller stablecoin issuers only if its regime is certified as substantially similar to the federal one. Some crypto firms are also seeking national trust charters in place of state licenses.

Rules differ by state and country and change often. Check your state regulator's website or a qualified professional for a specific case.