Money Transmitter Frequently Asked Questions
The North Carolina Office of the Commissioner of Banks charters, licenses and regulates
a variety of financial institutions within the State. Answers to many of your questions
and concerns may be found in this section. Please use any of the links to the left
for additional assistance. If you still need assistance, please call our office
at (919) 733-3016 and we will be happy to assist you.
Q. How do I apply for a money transmitter license?
A: The money transmitter license application is available on our website under
Forms and Fees. However, please call our office before sending your application
for any pre-application requirements.
Q. Is there an annual renewal?
A: Yes. The money transmitter license renewal period runs between
November 1st and December 31st. The online renewal is available under
Licensing Information or
Forms and Fees.
Q. Is stored value or “prepaid access” regulated under the Money Transmitter Act?
A: Yes. Any business that issues stored value or prepaid access
cards is defined as a money transmitter.
Q. What information is required to be reported quarterly?
A: All money transmitter licensees are required to provide electronically
uploaded quarterly reports to the Commissioner of Banks that provide all money transmission
for the period including the number and dollar amount per agent or branch location, broken
down by transmission type, per month.
Q. Is the transmission of virtual currency regulated under the NC MTA?
A: Yes. The NC MTA requires all persons engaged in the business of money transmission to obtain a license. Because the NC MTA defines “money transmission” as the “act of engaging in the business of receiving money or monetary value for transmission within the United States or to locations abroad by any and all means, including payment instrument, wire, facsimile, or electronic transfer,” and further defines “monetary value” as a “medium of exchange, whether or not redeemable in money,” virtual currency is within the scope of the NC MTA. See N.C. Gen. Stat. 53-208.3(a), 53-208.2(a)(11)(b), and 53-208.2(a)(12) (2015).
Q. Are virtual currency miners and users regulated under the NC MTA?
A: No. As noted above, the NC MTA regulates the transmission of virtual currency. It does not regulate the use of virtual currency. A “user” is someone who uses virtual currency to buy or sell goods and services. A merchant who accepts virtual currency as payment for goods or services is a user and does not require a license. A “miner” is someone who receives virtual currency as payment for verifying transactions, typically by providing computer resources to process data. Once the miner has completed its work, the miner generally becomes a “user” of virtual currency.
Q. Are virtual currency exchangers and administrators regulated under the NC MTA?
A: It depends. A virtual currency exchanger is a person that exchanges virtual currency for fiat currency or other virtual currencies, and vice versa. An exchanger that sells its own stock of virtual currency is generally not considered a virtual currency transmitter under the NC MTA. In contrast, an exchanger that holds customer funds while arranging a satisfactory buy/sell order with a third party, and transmits virtual currency and fiat currency between buyer and seller, will typically be considered a virtual currency transmitter.
A virtual currency administrator is a person that issues or redeems virtual currency. Although administrators must register with FinCEN and comply with the Bank Secrecy Act, merely acting as an administrator generally does not require a license under the NC MTA.
Q. Are there special licensing requirements applicable only to virtual currency transmitters?
A: No. The NC MTA applies to all transmitters of monetary value equally. It does not distinguish between virtual currency transmission and fiat transmission. This Office applies the same standards to virtual currency transmitters as it does to traditional fiat transmitters.
Q. Are Blockchain 2.0 technologies regulated by the NC MTA?
A: Generally not. Blockchain 2.0 technologies refer to the use of the blockchain (or other similar virtual distributed ledger system) to verify ownership or authenticity in a digital capacity. This technology includes such software innovations as colored coins (i.e. coins that are marked specifically to represent a non-fiat-money asset), smart contracts (i.e. agreements implemented on a virtual distributed ledger), and smart property (i.e. property that is titled using a virtual distributed ledger). These uses of the blockchain generally do not involve the use of virtual currency as a medium of exchange. As a result, these software innovations are not regulated by the NC MTA.
Q. Do providers of multi-signature software require a license under the NC MTA?
A: No. Multi-signature software allows a virtual currency user to distribute authority over his or her virtual currency among multiple different actors. This software requires multiple actors to authorize a virtual currency transaction before the transaction can be consummated. Specifically, a multi-signature provider holds one of two or more private keys needed to authorize transactions. Because the multi-signature provider cannot authorize a transaction alone, this provider is not holding virtual currency on behalf of another, and does not engage in virtual currency transmission by signing transactions on behalf of the user.
Q. Are wallet providers regulated under the NC MTA?
A: Generally yes. A hosted, custodial wallet provider is in the business of storing a user’s virtual currency on a remote computer until such time as the user desires to spend or exchange the user’s virtual currency. The hosted wallet provider typically agrees to safeguard the user’s private keys and make them available at some later date. This custodial function is regulated under the NC MTA.
In contrast, a non-hosted, non-custodial wallet is typically outside the scope of the NC MTA. A non-hosted wallet is a piece of software deployed on the user’s own computer or device that makes the user’s private keys easier to use by the user. In a non-hosted, non-custodial model, the software provider never gains access to the user’s private keys and does not agree to transmit the user’s virtual currency at a later time.