FinTech, Crypto, Trading & Markets |
Multi-State Securities, Money Transmitter Licensing & Lending Regulatory Group

Frequently Asked Questions

• What does Lowenstein’s Multi-State Securities, Money Transmitter Licensing & Lending Regulatory Group do?

  The Group counsels fintechs, crypto and digital asset firms, alternative finance platforms, lenders, broker-dealers, investment advisers, private funds, and issuers on state-by-state regulatory, licensing, and enforcement matters. We develop coordinated strategies that account for the divergent rules and expectations of regulators across all 50 states, helping clients register, launch, scale, and defend their businesses in an environment where state and federal oversight frequently overlap.

• Which types of clients benefit most from this practice?

  Companies operating across multiple states in financial services—including payments and money transmission, lending and servicing, trading and markets, digital assets and DeFi, investment advisory and brokerage, and multi-asset platforms—benefit from our integrated approach. Early-stage innovators seeking to launch in a handful of key states, as well as mature enterprises facing simultaneous multistate inquiries or enforcement actions, rely on the Group for pragmatic, business-forward guidance.

• How does the Group approach multi-state enforcement and investigations?

  We centralize strategy and communications to avoid fragmented responses, harmonize positions across jurisdictions, and coordinate parallel demands for documents, testimony, and remediation. Drawing on leadership experience with NASAA and state securities regulators, we help clients anticipate where states may align or deviate, identify opportunities for global or coordinated resolutions, and minimize the operational disruption that often accompanies multi-front regulatory scrutiny.

• Which regulators and agencies has the Group interacted with?

  Our team regularly engages with a broad range of state and federal regulators and self-regulatory organizations. Representative agencies include:

  • State securities regulators: The Group has represented clients before all fifty state securities regulators, including the New Jersey Bureau of Securities; New York Investor Protection Bureau (Office of the Attorney General); California Department of Financial Protection and Innovation (Securities Regulation); Texas State Securities Board; Washington State Securities Division; Alabama Securities Commission, Florida Office of Financial Regulation (Securities); Massachusetts Securities Division; Colorado Division of Securities; Illinois Securities Department; Arizona Corporation Commission (Securities Division).
  • State financial services, banking, and payments regulators: The Group has represented clients before all fifty state financial services, banking, and payments regulators, including New York Department of Financial Services (NYDFS); California Department of Financial Protection and Innovation (DFPI); Texas Department of Banking; Washington Department of Financial Institutions (DFI); Florida Office of Financial Regulation (OFR); Georgia Department of Banking and Finance; Illinois Department of Financial and Professional Regulation (IDFPR); Arizona Department of Insurance and Financial Institutions (DIFI); Colorado Division of Banking; Connecticut Department of Banking; North Carolina Office of the Commissioner of Banks; Ohio Division of Financial Institutions; Pennsylvania Department of Banking and Securities; Virginia State Corporation Commission (Bureau of Financial Institutions).
  • Federal regulators and SROs: U.S. Securities and Exchange Commission (SEC); Financial Industry Regulatory Authority (FINRA); Commodity Futures Trading Commission (CFTC); National Futures Association (NFA); Consumer Financial Protection Bureau (CFPB); Office of the Comptroller of the Currency (OCC); Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation (FDIC); Financial Crimes Enforcement Network (FinCEN); Office of Foreign Assets Control (OFAC).
  • Multi-state coordination bodies and systems: North American Securities Administrators Association (NASAA); Conference of State Bank Supervisors (CSBS); State Regulatory Registry/Nationwide Multistate Licensing System (NMLS); multi-state working groups and task forces; state Attorneys General multistate coalitions.

  This list is illustrative and not exhaustive; we tailor engagement strategies to the mix of agencies overseeing a client’s specific products, services, and geographies.

• When is state-level licensing required for money transmission involving fiat or digital assets?

  In most states, “money transmission” is broadly defined to include receiving money or monetary value for transmission. Many states treat certain digital asset activities as money transmission if the business accepts, stores, or transfers customer funds or digital assets, or converts between fiat and crypto. Requirements vary, and definitions are evolving, so determining whether a particular product or flow triggers licensing is intensely fact-specific and jurisdiction-dependent.

• How long does it take to obtain money transmitter licenses, and what are common requirements?

  Timelines vary widely by state and by the completeness of the application but often range from several months to more than a year for a full multi-state footprint. Common requirements include minimum net worth, surety bonds or other financial security, permissible investment obligations, background checks and fingerprints for control persons, robust AML/BSA and compliance policies, financial statements, and detailed flow-of-funds and product descriptions. Many—but not all—elements are submitted through NMLS; supplemental state-specific materials are frequently required.

• What is the Nationwide Multistate Licensing System (NMLS), and how does it affect compliance?

  NMLS is the centralized portal used by many state regulators for licensing, renewals, reporting, and examination management for money transmitters, lenders, servicers, and other financial services businesses. While NMLS streamlines certain processes, each state maintains its own substantive requirements, review practices, and interpretations. We manage NMLS filings alongside state-specific submissions and coordinate responses to regulators across jurisdictions to maintain consistency.

• What lending activities typically require state licenses?

  States regulate a broad set of activities, including making, brokering, servicing, or collecting consumer loans; engaging in small business or commercial lending; and operating lead generation or credit services businesses. Triggers, exemptions, interest and fee limitations, disclosure duties, and supervisory expectations vary by state and by product type. We advise on licensing strategies for consumer and commercial lending, including crypto-backed loans, marketplace lending models, and embedded credit programs.

• How do state “true lender,” usury, and servicing rules impact bank-fintech partnerships?

  State regulators scrutinize programs to assess which party is the true lender and whether state rate caps, licensing rules, or other obligations apply. In addition, servicing and collection activities may independently trigger licensing. We advise on program structuring, allocation of compliance responsibilities, bank partnership agreements, disclosures, and oversight to mitigate risk across jurisdictions while preserving operational flexibility.

• What state securities issues arise for digital assets, token offerings, and DeFi platforms?

  State securities regulators increasingly evaluate whether tokens or related rights constitute securities, whether platforms facilitate securities transactions, and whether associated activities require registration or exemptions. We counsel on the application of Blue Sky laws to token distributions, staking programs, yield products, and secondary market activities, as well as notice filings, exemptions, and the interplay with federal securities law.

• How do Blue Sky requirements affect private offerings and fund raises?

  Even when relying on federal exemptions, issuers often must make state notice filings, pay fees, and comply with state antifraud provisions. We help private funds, issuers, and placement agents confirm required filings, manage post-offering amendments, and coordinate responses to state inquiries. We also advise on broker-dealer and investment adviser registration questions that may arise in connection with capital raising.

• When do investment advisers and broker-dealers need state registration?

  Advisers below certain assets-under-management thresholds typically register at the state level unless an exemption applies, while broker-dealers and their agents generally require state registration absent specific exclusions. We navigate jurisdictional questions, branch and representative onboarding, exams, examinations, and remediation of findings, as well as cross-border issues for firms scaling into new states.

• How does the Group assist with regulatory examinations and audits?

  We prepare clients for state examinations, including document readiness, mock interviews, and control walkthroughs; manage responses to findings; and oversee corrective action plans. Our approach emphasizes credible engagement, consistent messaging across states, and documentation that demonstrates effective governance, risk management, and compliance.

• Can the Group help structure products to reduce licensing friction?

  Yes. We partner with clients to map product flows, assess licensing triggers, and select launch jurisdictions, taking into account regulator expectations, ongoing supervisory burdens, costs, and timelines. We advise on sponsor bank partnerships, custodial arrangements, settlement and wallet structures, and third-party risk management to optimize compliance outcomes without compromising business objectives.

• What should crypto and digital asset businesses know about custody, wallets, and permissible investments?

  States may treat custody of digital assets as a licensable activity and often impose permissible investment and safeguarding requirements designed to protect customer funds or value. We evaluate whether proposed wallet, custody, and settlement models are consistent with state expectations, advise on segregation and reconciliation practices, and address examiner focus areas such as cybersecurity, operational resilience, and consumer disclosures.

• How do you manage conflicts or inconsistencies between state and federal requirements?

  We identify the controlling authority for each obligation, map conflict points, and design frameworks that meet the highest applicable standard or implement jurisdiction-specific variants where necessary. Where appropriate, we engage regulators to clarify expectations, seek interpretive relief, or tailor remediation to the facts. Our goal is a coherent, defensible compliance posture that scales nationally.

• Do you assist with ongoing compliance after licensure?

  Yes. We support renewal cycles, periodic reporting, change-of-control and key individual approvals, product updates, marketing and disclosures, and exam readiness. Our team builds compliance calendars and governance frameworks aligned with the cadence of state reviews and business milestones, reducing the risk of inadvertent gaps as the organization scales.

• How do you approach timelines and budgeting for multi-state licensing and registrations?

  We sequence applications to align with strategic launch priorities, regulator throughput, and interdependencies among key states. We provide transparency around expected documentation, milestones, and critical path items—such as audited financials, surety bonds, AML program documentation, and control-person background checks—to help clients plan staffing, capital, and launch dates with greater certainty.