The crypto industry is evolving rapidly, and regulatory enforcement is keeping pace. It’s essential that businesses engaged in crypto transactions, custody, lending, trading, or payments stay on top of current developments and understand the current evolving framework of regulations imposed on this industry.
Operators in this space must stay on top of their regulatory obligations and implement effective compliance programs which require a firm understanding of applicable regulations to help avoid enforcement issues. This includes but is not limited to knowing your customer (KYC), anti-money laundering (AML) requirements, securities and commodities laws, and federal and state licensing obligations.
Key Licensing & Compliance Requirements
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License/Registration
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Required For
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Regulatory Authority
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FinCEN MSB Registration
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Money transmission, exchanges, custodial services
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Financial Crimes Enforcement Network (FinCEN)
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State Money Transmitter Licenses (MTLs)
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Businesses holding or transmitting customer funds
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State financial regulators
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BitLicense (NY Only)
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Crypto businesses serving New York residents
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New York State Department of Financial Services (NYDFS)
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Broker-Dealer Registration
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Platforms trading security tokens
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Securities and Exchange Commission (SEC) & FINRA
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Alternative Trading System (ATS) Registration
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Exchanges offering tokenized securities
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SEC & FINRA
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Futures Commission Merchant (FCM) & Introducing Brokers (IB) Registration
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Crypto derivatives trading platforms
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Commodity Futures Trading Commission (CFTC) & National Futures Association (NFA)
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Swap Execution Facility (SEF) Registration
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Crypto derivatives and swaps trading
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CFTC/NFA
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Bank Charter or Trust License
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Crypto custodians and stablecoin issuers
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Office of the Comptroller of the Currency (OCC) or state banking agencies
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State Lending License
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Crypto-backed lending services
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State financial regulators
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Payment Institution License
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Crypto payment processors handling fiat transactions
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State or federal payment regulators
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Commodity Trading Advisor (CTA) & Commodity Pool Operator (CPO)
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Crypto investment advice or fund management
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CFTC/NFA
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The specific licenses and registration(s) required depend on a business’s activities and the states in which it operates.
Post-License Compliance Requirements
Once licensed, businesses must maintain compliance through:
- KYC and AML Compliance: Transaction monitoring, customer verification, and suspicious activity reporting.
- Routine Audits and Filings: Annual compliance reports, regulatory disclosures, and independent financial and compliance audits.
- Cybersecurity and Consumer Protection: Data security, fraud prevention, and adherence to consumer financial protection laws.
- License Renewals and Regulatory Updates: Managing multistate license renewals and adapting to evolving regulations.
- Governance, Risk, and Compliance Strategies: Structuring operational controls to mitigate legal and regulatory risks.
Post-Registration Compliance Requirements
- Policies and Procedures: Written policies and procedures designed to detect, prevent, and correct violations of applicable laws.
- Periodic Risk Assessment: To mitigate operational, legal, concentration and reputational risks aligned with regulatory obligations.
- Annual Review: Review of policies and procedures annually to determine their adequacy and effectiveness of their implementation. Other annual internal audits may also be required rule or regulation based on activity such as custody of client funds or assets.
- Chief Compliance Officer: Designate a chief compliance officer with the requisite knowledge, experience, and authority to implement the compliance program.
The Future of Crypto Compliance: Key Developments
- Federal lawmakers are exploring a national crypto framework to streamline licensing.
- The SEC’s dismissal of its lawsuit against Coinbase signals potential regulatory shifts.
- The SEC’s new Cyber and Emerging Technologies Unit aims to enhance investor protection.
Staying ahead of these developments is critical for businesses operating in the crypto space.
Turn Compliance Into a Competitive Advantage
A strong compliance program safeguards against legal risks and enhances trust with customers, partners, and investors.
This guide reflects the latest updates as of Q1 2025. Given the rapidly changing regulatory landscape, businesses should seek professional compliance guidance for ongoing adherence.
