Everything Remittance Companies Need to Know about Stablecoin Licensing

Stablecoin-based remittances are gaining traction as a faster and cheaper alternative to traditional cross-border payments. While growing in adoption, they require a carefully coordinated stack of infrastructure and compliance partners to work at scale. From onboarding users to transmitting stablecoins across blockchains, each stage of the flow involves distinct roles, responsibilities, and regulatory requirements.

For U.S.-based fintechs, understanding which components require money transmitter licenses, and which can rely on partners or avoid licensure entirely, is key to building a compliant solution. Below, we break down each participant in the flow, the licensing implications, and how providers like Dynamic fit into the stablecoin tech stack.
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Key Roles and Licensing Requirements in Stablecoin Remittances

Stablecoin-based remittances involve multiple players at each stage of the user flow. Here is an overview of how each role fits into the remittance flow:

• Onboarding and Authentication: Before using the service, the sender must be identified and vetted through KYC/AML compliance providers that perform identity verification, sanctions screening, and other regulatory checks. Once approved, the user is provided with either a self-custodial or custodial wallet to hold and manage stablecoins.
• Fiat On-Ramp: The sender converts fiat into stablecoins through an on-ramp provider. This provider accepts fiat (via ACH bank transfer, card, or cash) and issues the equivalent stablecoin to the sender’s wallet. Often, the on-ramp works with a liquidity provider on the back end to execute the conversion.
• On-Chain Transfer: Once the transaction is initiated, stablecoins are transferred over a blockchain network to the recipient’s address. A wallet infrastructure provider or crypto payment API facilitates the on-chain transaction, handling execution without taking custody of user funds.
• Off-Ramp to Recipient: The recipient converts the received stablecoins into local fiat currency using an off-ramp provider. This could involve a local cash pick-up (via a partner like MoneyGram) or a deposit to the recipient’s bank account.
• Optional Wallet Custody: If the sender or recipient uses a hosted or custodial wallet service, a wallet custodian is responsible for safeguarding the crypto assets. Custodial wallet providers hold users’ private keys and can facilitate transactions on their behalf, though they are subject to regulatory oversight. In contrast, non-custodial wallet providers offer software that enables users to manage their own keys and assets directly, which generally does not require licensing.

What’s Needed to Operate Legally in the United States

Any business that handles funds or convertible digital currency on behalf of users must register federally as an MSB (Money Services Business) with FinCEN and obtain state Money Transmitter Licenses (MTLs) where it operates. In New York, companies engaged in digital currency business (such as exchanging or custodial services) need a BitLicense or a limited purpose trust charter from NYDFS.

Entities that do not actually hold or transmit user funds (including non-custodial providers like Dynamic) generally do not need money transmitter licenses, though they must adhere to other relevant laws around privacy and data security. The table below summarizes the licensing requirements for each role in the stablecoin remittance flow, along with examples of providers and their regulatory designations:

Building a Compliant Remittance Flow

Each component of the stablecoin remittance pipeline must navigate U.S. regulatory requirements appropriate to its function. Money transmission triggers both federal FinCEN MSB registration and state-by-state Money Transmitter Licensing, with New York’s BitLicense as a special case. Many crypto businesses have obtained dozens of state licenses or partnered with license holders to achieve nationwide coverage.

Notably, stablecoin issuers and liquidity providers are treated as regulated participants under FinCEN’s rules, ensuring they implement KYC/AML controls. Wallet custodians carrying customer assets likewise face intensive licensing and compliance obligations, often opting for trust charters to meet regulatory standards.

In contrast, service providers like Dynamic that do not custody funds are not directly licensed as financial institutions. By clearly mapping roles and licensing responsibilities, fintech builders can structure a compliant and scalable remittance system that safely bridges fiat and crypto for global money movement.
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Build borderless finance, the compliant way. Start integrating Dynamic’s non-custodial wallet infrastructure today.