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New CSBS Regs Aim to Make Moving Money Easier for Payments, Cryptocurrency Firms

As a result of new, streamlined regulatory policies, 78 of the top payment and cryptocurrency firms in the U.S. will be allowed to take a single exam to satisfy “all state regulatory requirements” with respect to money transmitting operations, according to the Conference of State Bank Supervisors (CSBS).

united states 151582 1280The comprehensive regulatory requirement, know as the MSB Networked Supervision, is set to take effect in 2021. According to the CSBS, the companies included in the program each operate in more than 40 states and move a combined $1 trillion each year in customer funds. The new plan was the result of the work of CSBS’ Fintech Industry Advisory Panel, which released a number of recommendation’s earlier this year.

“Building on years of multistate coordination, this exam protocol will enable states to fine tune a risk-based approach to each company’s operations. When compliance issues arise, the states will be better positioned to follow up throughout the year,” according to the organization. The exam will be administered by a group of examiners led by an overseeing state examiner. This group will feature experts in anti-money laundering and cybersecurity, which serves the dual purpose of providing valuable insight and freeing up resources, the announcement notes.

“One company, one exam is a significant and important shift in how state regulators will ensure compliance with consumer protection and safety and soundness standards for the largest payments companies,” said Kevin Hagler, Georgia Department of Banking and Finance commissioner and CSBS board chair in a statement. “By working together and relying on the excellent work of fellow state regulators, we will be able to do even more.”


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"NEW: The U.S. Conference of State Bank Supervisors (CSBS) has provided a new regulatory licensing procedure that makes it easier for fintech and cryptocurrency-related firms to establish interstate operations."

Rosemary Gallagher, associate general counsel at Western Union, one of the participating entities in the initiative’s pilot program, praised the move. “We firmly believe that the impact of this new approach to multistate exams will be significant in terms of driving harmonization and streamlining of state supervision across the board,” she said.

Rick St Onge, the board president of the Money Transmitter Regulators Association and Washington State Department of Financial Institutions examinations chief, said the next stage of the initiative is just as important as all the work that has come before it. “For over a century, state regulators have responded to evolutions within the money transmission industry, and networked supervision is the logical next step to more effectively and more efficiently supervise the growing number of nationally operating companies,” he said.

Additionally, the Office of the Comptroller of the Currency, just days before the CSBS announcement, updated its own regulatory policies and procedures regarding the operation, establishment and activities of federally licensed foreign banks. The “Federal Branches and Agencies” booklet included in the Comptroller’s Licensing Manual was last issued in October of 2019.

According to information from the organization, the new language:

  • Clarifies various notice and application filing requirements and processes
  • Updates decision factors and criteria
  • Removes all internal licensing procedures
  • Makes other minor modifications throughout
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