Industry Alert: Change in Money Transmission Definition

Tallahassee, Fla. - Since at least 2012, a “money transmitter” in Florida has been defined as “a corporation, limited liability company, limited liability partnership, or foreign entity qualified to do business in this state which receives currency, monetary value, or payment instruments for the purpose of transmitting the same by any means, including transmission by wire, facsimile, electronic transfer, courier, the internet, or through bill payment services or other businesses that facilitate such transfer within this country, or to or from this country.” Section 560.103(23), Florida Statutes.

Historically, the Office of Financial Regulation (OFR) has interpreted this definition to require money transmitter licensure only for intermediaries receiving currency, monetary value, or payment instruments for the purpose of transmitting same to a third party.

However, in State v. Espinoza, 264 So. 3d 1055, 1065 (Fla. 3rd DCA 2019), the Court held that section 560.103(23), Florida Statutes, does not require a “third party” to be considered a money transmission transaction and found Defendant Espinoza was subject to licensure requirements because he engaged in selling Bitcoin directly to an undercover investigator for cash, in a peer-to-peer transaction.

In response, on August 17, 2021, the OFR issued an industry alert wherein it pointed to its change in legal interpretation to conform with the Espinoza decision. The industry alert also provided notification to money services businesses that involved two-party transactions that they would be required to be licensed. In addition, the OFR urged such businesses to apply for money services business licenses as soon as possible, but no later than December 31, 2021.

A bill, CS/HB 273, was signed into law on May 12, 2022, and will take effect on January 1, 2023. As of that date, the definition of a money transmitter contained in chapter 560, Florida Statutes, will read as follows:

"Money transmitter" means a corporation, limited liability company, limited liability partnership, or foreign entity qualified to do business in this state which receives currency, monetary value, a payment instrument, or virtual currency for the purpose of acting as an intermediary to transmit currency, monetary value, a payment instrument, or virtual currency from one person to another location or person by any means, including transmission by wire, facsimile, electronic transfer, courier, the Internet, or through bill payment services or other businesses that facilitate such transfer within this country, or to or from this country. The term includes only an intermediary that has the ability to unilaterally execute or indefinitely prevent a transaction.

Due to the impending change in the legal definition of a money transmitter, the OFR finds it would be impractical to take action against money transmitters engaging in two-party transactions from now to January 1, 2023. Therefore, the OFR urges each and every seller of virtual currency to assess whether it will be required to be licensed under the new law, and if so, to apply for a license (if it has not already done so). The OFR will strictly enforce the new law as of January 1, 2023. If you, as a seller of virtual currency, have any doubt as to whether the new law will require you to be licensed, you should contact an expert or submit a petition for declaratory statement to the OFR pursuant to section 120.565, Florida Statutes, and Rule 28-105, Florida Administrative Code.