By FOCUS, A Leonine Business
The Money Transmission Modernization Act (MTMA) is a piece of model legislation spearheaded by the Conference of State Bank Supervisors (CSBS). Its purpose is to establish a uniform set of standards and regulations for money transmitters across the United States to modernize the supervision and regulation of these entities. Currently, 49 states and the District of Columbia require money transmitters to hold licenses, creating a patchwork of regulatory requirements. The Money Transmission Modernization Model Act aims to reduce the regulatory burden on companies by standardizing these rules.
The MTMA introduces a comprehensive framework that defines “money transmitter” and standardizes the licensing process for companies that facilitate money transmission. It also sets out specific exemptions from licensing requirements and supports multistate licensing to streamline operations for companies working across multiple states. This call for uniformity is only getting louder as the fintech sector continues to grow rapidly, particularly among payments providers. The number of money transmitters licensed to operate in 40 or more states has more than doubled since 2015, reflecting the burgeoning demand for digital payment services.
To date, 26 states have adopted the MTMA either fully or partially, demonstrating widespread legislative interest in reforming the money transmission sector. In 2024 alone, 19 states introduced legislation inspired by the MTMA to update their regulatory frameworks. Of those 19 states, 11 have enacted MTMA-related legislation, either fully or partially enacting the MTMA or amending the MTMA after having previously passed the act.
Among the states taking action is Illinois, where SB 3412/Act 103-0991 was signed into law by Democratic Gov. J.B. Pritzker on August 9. Some provisions of this law took effect immediately, while others will take effect on January 1, 2025. Illinois’ law creates the Uniform Money Transmission Modernization Act, heavily influenced by the MTMA.
In Michigan, HB 5798, introduced on June 6, was referred to the House Insurance and Financial Services Committee. Sponsored by Rep. John Fitzgerald, D-Wyoming, this bill seeks to align Michigan’s regulatory framework with the MTMA. The Michigan legislature is still in session so the bill still has the chance to move.
Vermont also joined the ranks of states modernizing their money transmission laws with the signing of HB 659 by Republican Gov. Phil Scott on May 20. The law, effective as of July 1, adopts the MTMA in whole.
As states continue to consider and adopt MTMA-inspired legislation, it highlights the growing recognition of the legislative interest in modernizing outdated regulatory frameworks, especially as fintech and digital payment services expand rapidly. While not every state has fully embraced the MTMA, the momentum behind its adoption suggests that there is increasing support for a more uniform approach to regulating money transmission. Whether more states will fully embrace the MTMA remains to be seen, but the trend points towards continued efforts to reduce regulatory fragmentation and support uniformity in the oversight of the money transmission sector. FOCUS will continue to monitor the developments of the MTMA and money transmission legislation more broadly.
