Obtaining an MSB Licence in Montana, US: Everything You Need To Know

Montana has rapidly become a strategic hub for digital asset businesses seeking expedited entry into the U.S. market, distinguished by its notably lighter regulatory touch. Unlike most states, there is no need to obtain an MSB license in Montana at the state level. This allows properly structured ventures, such as exchanges, wallet providers, and stablecoin issuers, to launch operations with a federal FinCEN registration and adherence to the Bank Secrecy Act. By coupling this efficient framework with a proactive, business-friendly approach to blockchain innovation, Montana offers a compelling and reputable base for the next generation of fintech.

In this article, we will cover:

• How crypto regulation works in Montana and why it differs from most U.S. states
• Federal registration and AML/CFT obligations for MSBs
• Incorporation, setup steps, and licensing timelines
• Typical costs and ongoing operational requirements
• Expansion considerations and risks when servicing clients outside Montana
• The advantages of building a crypto business in the state

Regulatory Background in Montana

Montana’s regulatory framework for digital asset and money services businesses is distinct within the United States. Unlike most states, Montana does not impose a state-level money transmitter license requirement for companies engaging in the exchange or transmission of fiat or digital assets. The Montana Division of Banking and Financial Institutions does not regulate money transmitters at the state level, meaning that properly structured crypto companies can establish operations without undergoing a lengthy and costly state licensing process.

This position has been consistent for more than a decade, although in early 2023 the state briefly signaled a potential change by requesting business plans and fund-flow information from operators. The initiative was later retracted, reaffirming Montana’s long-standing policy of not requiring money transmission licensing. As a result, the primary regulatory obligations for crypto operators in Montana originate at the federal level, under the Bank Secrecy Act and FinCEN’s MSB registration regime.

From a business perspective, this approach offers several benefits:

• No state application process, state licensing fees, or annual state reporting
• Faster market entry compared to states that require full MTL licensing
• Lower legal and administrative burden for new market entrants
• A predictable regulatory environment that emphasizes federal compliance

Montana’s policy is particularly attractive to exchanges, OTC brokers, payment platforms, and wallet service providers that need a compliant U.S. structure without the fragmentation and jurisdictional complexity present in many other states. However, companies must remain aware that operating or serving customers in other states may still trigger separate licensing requirements elsewhere.

Licensing Differences Between Montana and Other U.S. Jurisdictions

The regulatory approach to crypto in Montana is a notable exception to the norm in the United States. Most states, including New York, California, and Florida, treat digital asset services as money transmission. This subjects businesses to a demanding state-level licensing process that typically involves:

• A detailed application and background checks
• Significant net worth and bonding requirements
• Extensive AML and consumer protection programs
• Annual reporting and state examinations

Montana, however, foregoes this state-level license entirely. Instead, it places the regulatory burden at the federal level, requiring only a FinCEN MSB registration alongside BSA compliance.

This framework offers a significant advantage, serving as a strategic launch point for early-stage companies seeking a U.S. footprint with lower cost and faster entry. It is important to understand that this is primarily a launch strategy. Once a Montana-based firm actively services customers in other states, it must comply with those individual states’ licensing laws, necessitating a long-term, multi-jurisdictional strategy for national expansion.

Federal Regulatory Requirements for MSBs in Montana

While Montana does not impose a state-level money transmitter license, crypto businesses operating from the state are fully subject to U.S. federal regulation under the Bank Secrecy Act (BSA). Any company engaged in the exchange, transmission, or conversion of digital or fiat currency for customers is generally considered a Money Services Business (MSB) and must register with the Financial Crimes Enforcement Network (FinCEN).

FinCEN Registration (Form 107)

Crypto MSBs are required to:

• Register electronically with FinCEN using Form 107
• Renew registration every two years
• Update FinCEN promptly if ownership, activities, or business details change

FinCEN registration is not a licensing approval in the traditional sense. Instead, it is a legal declaration that a company conducts money services activities and is committed to full BSA compliance standards.

Core AML/CFT Obligations

A federally registered MSB must develop and maintain a comprehensive Anti-Money Laundering (AML) program, which includes:

• Appointment of a dedicated compliance officer
• Written AML policies and procedures
• Customer identification and due diligence (KYC and CDD)
• Ongoing transaction monitoring
• Sanctions screening and risk scoring
• Recordkeeping and internal reporting lines
  Employee training with documented frequency and scope
• Independent AML testing conducted regularly

These standards apply regardless of a company’s size or maturity. FinCEN and the IRS—the delegated examiner for MSBs—expect AML controls to be appropriate to the business model, transaction flows, and customer risk exposure.

Mandatory Reporting Requirements

Registered MSBs must also comply with federal reporting obligations, including:

• Suspicious Activity Reports (SARs) for transactions potentially involving fraud, money laundering, or other financial crime
• Currency Transaction Reports (CTRs) for qualifying cash transactions
• Recordkeeping for certain fund transfers and transactions, even if no report is filed
• Use of the BSA E-Filing System for all federal submissions

Failure to maintain adequate reporting and controls can result in civil penalties, enforcement actions, and, in severe cases, loss of ability to operate.

Federal Examinations

Crypto MSBs should expect periodic examinations conducted by IRS (as the delegated examiner) and FinCEN in certain cases.

Examinations evaluate:

• Effectiveness and proportionality of AML controls
• Adequacy of reporting and monitoring
• Corporate governance, operational transparency, and documentation

For companies operating from Montana, federal examinations are the primary supervisory mechanism, since state oversight does not apply.

Types of MSB Activities in Montana

In Montana, the determination of whether a crypto company is regulated does not depend on state licensing but on whether its activities qualify as Money Services Business (MSB) operations under federal law. If a business exchanges, transmits, or holds value for customers, it is generally required to register with FinCEN and maintain a full AML framework.

Below is a concise overview of common crypto business models and how they are treated at the federal level:

Activities Usually Not Considered MSBs

Some business models may avoid MSB status if properly structured, such as:

• Non-custodial wallet providers
• Blockchain software development
• Mining and validation services
• Infrastructure hosting without custody or transmission

If these businesses later add exchange, custody, or transmission features, MSB obligations may be triggered.

Overall, Montana offers operational flexibility, but FinCEN rules apply fully to businesses conducting financial services with customer value.

Company Formation and MSB Registration Process in Montana

Launching a crypto MSB in Montana is typically faster than in most U.S. jurisdictions because there is no state-issued money transmitter license. However, businesses must still complete proper incorporation and federal registration before operating.

1. Company Incorporation in Montana

Most crypto businesses establish a corporation or LLC with the Montana Secretary of State. Typical steps include:

• Selecting a business structure
• Reserving and registering the company name
• Filing incorporation documents
• Appointing a registered agent in Montana
• Obtaining an EIN from the IRS

Incorporation can usually be completed within several business days.

2. FinCEN MSB Registration

Once formed, companies conducting money services activities must register with FinCEN via Form 107. MSB registration must be renewed every two years and updated if key details change.

3. AML Program Development

Before starting operations, businesses must prepare a full Bank Secrecy Act compliance framework, including:

• Written AML policies
• Designated compliance officer
• KYC and monitoring procedures
• Recordkeeping and reporting processes
• Staff training and independent testing

4. Banking and Payment Infrastructure

Most crypto MSBs require:

• Business bank accounts
• Transaction and fund-flow policies
• Auditable financial controls

Financial institutions may request AML documentation before account approval.

Overall, companies can typically complete incorporation and federal registration in 4–8 weeks, depending on business complexity and readiness of compliance documentation.

Costs and Timelines for Registering a Crypto MSB in Montana

Registering a cryptocurrency business as a Money Services Business in Montana involves clearly defined federal requirements, as the state does not issue its own money transmission license. Companies should be prepared for predictable initial expenses, ongoing reporting costs, and a registration process that can be completed relatively quickly compared to other U.S. jurisdictions.

Key Costs Associated with MSB Registration

Annual operating expenses for a Montana MSB license  vary widely based on business scale, transaction volumes, and the compliance model used. Most digital asset companies spend USD 35,000 – 70,000 per year if relying on outsourced compliance and lightweight monitoring systems.

Operations with larger customer bases or higher transaction throughput typically budget USD 70,000–180,000 or more annually, driven by independent AML audits, compliance staffing, software licensing, reporting obligations, and specialized crypto analytics.

Expected Registration Timelines

The timeline for launching a compliant MSB in Montana is generally faster than in states requiring money transmission licensing, as there is no state-level approval process. Typical steps include:

• Company formation and basic structuring
• Preparing the AML/KYC compliance framework
• FinCEN MSB registration and notification
• Activation of business operations and reporting procedures

Most companies establishing a crypto MSB in Montana can expect to become operational in a short timeframe, often a few weeks, assuming internal documentation is ready and compliance policies meet federal expectations. No state licensing means faster market entry, lower regulatory complexity, and reduced administrative barriers compared to most other U.S. states.

Ongoing Compliance Obligations for Montana MSBs

Operating a crypto business in Montana under MSB status requires continuous adherence to federal regulatory standards. Because the state does not impose its own money transmission licensing regime, compliance oversight is largely driven by FinCEN, the Bank Secrecy Act, and supporting federal requirements. Companies must ensure that their internal controls, reporting, and monitoring systems remain up to date and capable of detecting suspicious activity in real time.

Core Compliance Requirements

1. Anti–Money Laundering Program Maintenance
   MSBs must maintain a written, risk-based AML/CFT program aligned with 31 CFR §1022, including policies for detection, escalation, and reporting. The program must evolve alongside changes in products, customer profiles, and transaction patterns.
2. Customer Identification and KYC
   Montana MSBs must perform identity verification, sanctions checks, and continuous risk evaluation of both new and existing customers.

Common processes include:

• KYC at onboarding
• OFAC sanctions screening
• Beneficial ownership verification
• Periodic profile refresh based on risk

3. Transaction Monitoring and Blockchain Analytics
   MSBs must implement automated or manual reviews to identify unusual activity and investigate red flags, including for privacy-enhancing coins, high-risk geographies, and mixer services.
4. Federal Reporting Obligations
   Required filings include:

• Suspicious Activity Reports (SARs)
• Currency Transaction Reports (CTRs)
• Timely responses to law-enforcement inquiries and subpoenas

5. Independent AML Audit
   An annual independent review of the AML program is mandatory to validate the effectiveness of policies, controls, and monitoring procedures.
6. Recordkeeping and Data Retention
   MSBs must retain transaction data, identification documents, filings, and investigative notes for at least five years in accordance with FinCEN requirements.
7. Ongoing Supervision and System Review
   Compliance officers must regularly evaluate the adequacy of internal tools, vendor performance, blockchain monitoring systems, and escalation channels to ensure they remain suitable for business scale and risk.

Montana’s MSB regulatory environment offers structural advantages, but federal oversight remains strict. Strong governance, independent testing, and vigilant customer monitoring are essential to maintaining operational integrity and regulatory alignment.

Advantages of Establishing a Crypto MSB in Montana

Montana has emerged as a strategic jurisdiction for digital asset companies seeking a faster, more cost-efficient entry into the U.S. market. Unlike many states that impose money transmitter licensing requirements, Montana does not require a state MTL for virtual currency services. This allows companies to launch operations once their entity is formed, federal MSB registration is completed, and an AML program is in place.

Key Advantages

• No State-Level Transmission License
  Most states require expensive and lengthy MTL approvals, bonding, and background checks. Montana removes this barrier, significantly reducing startup costs and accelerating market entry.
• Faster Launch Timelines
  Without the need for state licensing, companies can begin operations shortly after corporate formation and FinCEN registration, often in just a few weeks.
• Lower Regulatory Cost Structure
  The absence of state oversight eliminates initial and recurring licensing fees, allowing firms to allocate budget to compliance systems, AML controls, and operational growth.
• Business-Friendly Environment
  Montana offers a predictable regulatory climate, competitive incorporation costs, and government structures traditionally supportive of fintech and financial innovation.
• Ideal for Scaling Nationally
  Montana serves as a gateway to broader U.S. markets. Federal MSB registration enables companies to serve customers in multiple states, subject to each state’s rules, without starting from the most restrictive licensing environments.

In short, Montana provides a balanced framework combining federal regulatory credibility with reduced entry barriers, making it attractive for exchanges, brokers, custodians, and other crypto service providers.

Potential Disadvantages of Choosing Montana

While Montana offers one of the fastest and most cost-efficient entry routes into the U.S. crypto market, its simplified framework also comes with certain limitations that companies should consider before launching.

Key Drawbacks

• No state license may limit credibility with banks and partners
  Some financial institutions prefer working with firms licensed at the state level, which can make onboarding more challenging.
• Not all states allow operations without a state MTL

Expanding outside Montana may require obtaining individual licenses elsewhere, increasing costs and timelines.

• Stricter scrutiny at the federal level
  With no state oversight, federal regulators may be more focused on the quality of AML controls and ongoing reporting.
• Less structured regulatory guidance
  States with established licensing frameworks often offer clearer expectations and supporting instructions, which Montana lacks.

For startups with strong compliance programs, these challenges are manageable, but they should be factored into long-term planning.

How Gofaizen & Sherle Can Help

Setting up a cryptocurrency MSB in Montana requires more than forming a company and registering with FinCEN. Businesses must present a defensible compliance framework, develop formal AML documentation, and ensure ongoing readiness for supervisory inquiries and independent audits. Gofaizen & Sherle provides comprehensive end-to-end support for launching and operating a fully compliant MSB in the United States.

Company Formation and Registration

We establish the legal entity in Montana, prepare corporate documents, organize the shareholder structure, and ensure that the new business meets all local statutory requirements. We also handle MSB registration with FinCEN on behalf of the client.

Comprehensive Support with Regulatory Filings

Our specialists guide clients through all regulatory procedures, including document preparation, application submissions, and communication with U.S. regulators and financial institutions throughout onboarding.

Business Planning and Compliance Documentation

We prepare the key operational and regulatory documents required for an audit-ready MSB, including:

• Business plans aligned with federal standards
• AML/CFT policies and internal controls
• KYC, sanctions screening, and transaction monitoring procedures
• Reporting workflows for SARs, CTRs, and other FinCEN obligations

FinTech and Digital Asset Regulatory Expertise

Gofaizen & Sherle’s legal and compliance team has extensive experience supporting digital asset businesses, exchanges, payments companies, custodians, and other regulated operators across multiple jurisdictions. This ensures our clients implement market-tested controls that meet current federal expectations.

Employee Compliance Training

To support long-term readiness, we provide training programs for compliance officers and operational staff, covering regulatory requirements, transaction red flags, SAR preparation, and ongoing monitoring duties.

Ongoing Operational Support

Post-licensing, we assist with ongoing maintenance, including:

• AML program updates and annual independent audits
• Support with regulatory reporting
• Representation and responses to supervisory inquiries
• Policy revisions reflecting evolving U.S. compliance standards
• Accounting and administrative support where required

With a structured, turnkey approach, Gofaizen & Sherle enables crypto businesses to enter the U.S. market faster, with a robust regulatory framework that supports long-term stability and growth.

Conclusion: Montana as a Strategic and Efficient Launchpad for U.S. Crypto Operations

Montana has positioned itself as a highly attractive entry point for crypto businesses seeking access to the U.S. market without the heavy state licensing burden found elsewhere. With no state money transmitter license required, companies can launch operations after forming a Montana entity, registering with FinCEN, and implementing a compliant AML framework. While federal oversight remains strict, the state’s business-friendly environment, lower cost of entry, and faster deployment timelines make it ideal for exchanges, brokers, wallets, and other digital asset service providers aiming for efficient market expansion.

If you have any questions, please contact us at info@gofaizen-sherle.com — our team will be happy to provide comprehensive advice on obtaining an MSB license in Montana.