Most companies asking this are not covered by the Bank Secrecy Act at all. The rule turns on whether you accept value from one person and transmit it to another, so a company holding a family’s own coins is a “user” outside the regime. My view is that the expensive error runs both directions here, and answering the status question honestly beats any records template.
Part of our guide: Wyoming Crypto LLC.
The short version
- FinCEN is explicit: “A user of virtual currency is not an MSB”, and falls outside MSB registration, reporting, and recordkeeping (FIN-2013-G001).
- The hinge is whose value moves: money transmission means acceptance from one person and transmission to another, so a company moving only its own property falls outside it (31 CFR 1010.100(ff)(5)).
- An MSB must register on FinCEN Form 107 within 180 days of being established, and renew every two years.
- An MSB needs a written AML program with four required elements, one being independent review by someone other than the compliance officer (31 CFR 1022.210(d)).
- Five years is the retention floor for everything the BSA requires, and a “no” on MSB status leaves IRS and entity recordkeeping intact.
Whose value is moving
The BSA reaches “financial institutions,” and for a crypto business that means money services business, specifically money transmitter. 31 CFR Chapter X defines it narrowly:
“A person that provides money transmission services. The term ‘money transmission services’ means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.”
31 CFR 1010.100(ff)(5)(i)(A)
Two people appear in that sentence: one you accept from, one you transmit to. A company buying bitcoin with its own money and later selling it never produces that pair. FinCEN sorted virtual currency participants into three roles in 2013 and has held that line. A user obtains virtual currency to purchase goods or services on the user’s own behalf. An exchanger trades it as a business, and an administrator issues and redeems one. Users sit outside the MSB definition; the other two sit inside.
FinCEN’s 2019 guidance supplies a concrete test. Where a person sits between an owner and that owner’s value, treatment depends on “(a) who owns the value; (b) where the value is stored; (c) whether the owner interacts directly with the payment system where the CVC runs; and, (d) whether the person acting as intermediary has total independent control over the value.” Someone transacting through an unhosted wallet on the user’s own behalf is “not a money transmitter.”
Two limits travel with this. Paragraph (ff)(8) also excludes banks, persons functionally regulated by the SEC or CFTC, and natural persons acting infrequently and not for gain or profit, an exclusion available to a human being, so wrapping occasional activity in an LLC forfeits it. And federal status settles only the federal question: a business can clear the FinCEN test and still owe a state money transmitter license.
What the regime costs once it applies
Accepting value from customers and transmitting it starts four obligations at once.
Registration. FinCEN Form 107 is filed within 180 days of the business being established and renewed every two years, with the filed copy and its support kept in the US for five years (FinCEN, filing information).
A written AML program. Section 1022.210 requires an “effective anti-money laundering program” built from internal controls, a designated compliance officer, training, and a review. The review is the element most often skipped:
“Provide for independent review to monitor and maintain an adequate program. The scope and frequency of the review shall be commensurate with the risk of the financial services provided.”
31 CFR 1022.210(d)(4)
Reporting. An MSB reports suspicious transactions involving or aggregating at least $2,000, within 30 calendar days of initial detection, keeping the filing and its support five years (1022.320). Currency transaction reports work differently: 1010.311 is triggered by “a transaction in currency of more than $10,000,” and “currency” here means coin and paper money. A business that never handles physical cash generates few CTRs, which gets misread as no reporting duties.
Records and the Travel Rule. For transmittals of funds of $3,000 or more, 1010.410(e) fixes what you retain: transmittor name and address, amount, execution date, payment instructions, and the recipient with their institution. Subsection (f) requires that information to travel with the order to the next institution, and the 2019 guidance confirms it reaches CVC transmittals at the same threshold. Everything the chapter requires is held five years (1010.430(d)).
What survives a “no”
Landing outside the BSA closes one rulebook and leaves several open.
IRS obligations are untouched. A business keeps books adequate to support what it reported, and the digital asset question sits at the top of the return (recordkeeping, digital assets). One trap sits nearby: section 6050I requires Form 8300 from a business receiving more than $10,000 in cash, and while Announcement 2024-4 held that “at this time, digital assets are not required to be included” in that threshold, physical cash always has been. Crypto tax reporting for LLCs covers where the filings land, and common crypto tax record mistakes covers what usually goes missing.
Your bank also carries obligations you will feel without incurring them, and the federal posture moved recently. FIL-7-2025 rescinded the 2022 prior-notification requirement, clarifying that supervised institutions “may engage in permissible crypto-related activities without receiving prior FDIC approval.” The supervisory floor moved and each institution’s own appetite did not, so account opening still runs long. Custody for LLCs covers the same dynamic on the custodian side.
What I actually see
The AML program sold to a company that does not need one. A family holding entity turns up with a binder, a compliance officer title handed to a relative, and an annual fee. The program describes the company as a money services business, so its own file now asserts a status it does not hold.
The arrangement that grew sideways. Someone buys coin for a friend at cost, then for friends of friends, then takes a spread. Dollars arrive from one person and coin goes to another, and nothing was ever filed. This is the pattern carrying real exposure, since running an unlicensed money transmitting business is a federal offense under 18 U.S.C. § 1960.
Two FinCEN regimes collapsed into one worry. Beneficial ownership reporting and the BSA money services rules are separate rulebooks from the same bureau, and searching “FinCEN requirements” returns them blended. I have watched people conclude they need an AML program after reading about a beneficial ownership deadline.
The check I would run: take the company’s last twenty transfers and write three columns. Whose property was it before. Whose property was it after. Did anyone else’s value pass through an account you control. If the first two columns ever name different parties, or the third is ever yes, get an opinion before the next transfer. If they never do, what remains is a tax and entity records problem.
Where this goes wrong
The failures cluster where a business changes shape and nobody re-asks the question.
A company that held its own assets starts holding a friend’s, and the user answer expires unnoticed. A staking or pooling arrangement takes in other people’s coin and returns it with rewards, putting somebody else’s value under your control. An operating business accepts crypto from customers and forwards proceeds to third parties, walking out of the payment processing exemption in (ff)(5)(ii) and into transmission. A company registers defensively and builds nothing behind it, or writes the program once and never has it independently reviewed, failing 1022.210(d)(4). And records exist but not in the shape 1010.410(e) specifies, so the transmittal fields sit scattered across an exchange export and a spreadsheet purged at three years.
The decision rule
- Answer the status question in writing before buying any compliance product.
- Apply the two-person test to your transaction flow: acceptance from one person, transmission to another.
- Run FinCEN’s four criteria on any arrangement touching somebody else’s value.
- Check state licensing separately, because federal status does not resolve it.
- Register on Form 107 within 180 days if you are an MSB, and calendar the two-year renewal.
- Build the program with all four elements, naming an independent reviewer who is not the compliance officer.
- Capture the 1010.410(e) fields at transaction time at or above $3,000, since reconstructing them from exports rarely works.
- Retain for five years, and re-run step one the moment the business serves anyone outside the entity.
Where this sits
This question straddles the Wyoming LLC and custody material. Whether an LLC can own a wallet establishes the ownership fact the analysis turns on, and staking and stablecoins most often start moving other people’s value.
The join is where this fails. An attorney forms the entity, a CPA files the return, a custodian runs its onboarding, and none is asked whether the company transmits value for anyone. Each answers a narrower question and assumes somebody else asked the wider one. Write the status question down with your transaction flow underneath it and give the same page to all three, because the version that matters is the one they have all seen.
Sources
- FinCEN, FIN-2013-G001, Virtual Currency Guidance
- FinCEN, FIN-2019-G001, Convertible Virtual Currencies
- 31 CFR 1010.100, General definitions
- 31 CFR 1022.210, AML programs for MSBs
- 31 CFR 1010.410, Records to be made and retained
- 31 CFR 1022.380, MSB registration
- FDIC, FIL-7-2025, Crypto-Related Activities
Related
- Crypto tax reporting for LLCs
- Can a Wyoming LLC own a crypto wallet?
- Crypto custody for LLCs
- Common crypto tax record mistakes
- Can an LLC hold stablecoins?
- Crypto banking and exchange
Last updated: 3 August 2026.
This article is general education, not legal, tax, or investment advice. Nothing here determines your registration status under the Bank Secrecy Act, which depends on your specific transaction flow. Talk to a qualified attorney about your own situation.
