The time and expense of applying for state money transmitter licenses can be an incredibly steep barrier to entry for many fintech and cryptocurrency businesses. Seven states—Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas, and Washington (collectively, “Signatory States”)—have taken an initial step to lower that barrier. They have signed an agreement (“Protocol”) aimed at expediting and simplifying the application process for money services businesses. The Conference of State Bank Supervisors (“CSBS”) announced the agreement and indicated other states are expected to join.

For states participating in the Protocol, licensing will be divided into two phases: a Phase One review of general license application data and a Phase Two review of state-specific license application data. Within 25 business days of an application being completed, one Signatory State will complete a Phase One review and document its completion in the Nationwide Multistate Licensing System. The remaining Signatory States will rely on the Phase One review “to the greatest extent possible under law” and then complete their own Phase Two review (or determine the entity does not need a license). The Protocol does not provide a timeframe in which Phase Two must be completed.

The Protocol does not identify what qualifies as “general license application data” reviewable in Phase One, but the CSBS press release indicates that it includes IT, cybersecurity, business plan, background check, and Bank Secrecy Act compliance.

Although it leaves some questions unanswered and still ultimately requires at least some individual state reviews, the Protocol is a step in the right direction to making the money transmitter licensing gauntlet a bit easier.