Congress Is Redrawing the Rules of Money Transmission in America

For decades, anyone who wanted to transmit money across state lines or borders had to navigate a frustrating patchwork of 50 different state laws, countless licensing fees, and compliance hurdles that made innovation slow and expensive. That era is ending fast.

The 119th Congress is in the middle of the most sweeping overhaul of U.S. money transmission rules in modern history. Driven by the explosion of digital payments, the rise of stablecoins, and growing concerns about underground money flows, lawmakers on both sides of the aisle are reaching for the redrawing pen and the implications for consumers, fintech companies, banks, and global remittance senders are enormous.

Here’s a deep dive into exactly what’s happening, why it matters, and what comes next.

What Is “Money Transmission” And Why Does It Need Reforming?

Before we get into the legislation, it helps to understand the problem.

A money transmitting business (MTB) is any company or person that receives money from one party and transmits it to another think PayPal, Western Union, Venmo, or even certain crypto wallets. Under current federal law (18 U.S.C. § 1960), operating as an unlicensed money transmitter is a federal crime. But the definition of what requires a license has long been vague, inconsistent, and increasingly outdated.

The core problem? There’s no single national money transmitter license. Instead, companies must obtain separate licenses in each of the 49 states that require them (plus Washington D.C.) a process that can take years and cost millions of dollars. This “50-license problem” has long frustrated fintech startups and stifled competition in payments.

At the same time, bad actors exploit the gaps. Informal Value Transfer Systems (IVTS) underground networks used to move money without touching the formal banking system have been flagged by the Treasury’s Financial Crimes Enforcement Network (FinCEN) as vehicles for money laundering and even terrorism financing. Congress is now trying to fix both problems at once.

The GENIUS Act: A National Payments Rail Is Born

The most transformative development came in July 2025, when President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act, better known as the GENIUS Act, into law.

The Act creates a comprehensive regulatory framework for payment stablecoins in the United States, and for the first time, Congress appears to have created a kind of bespoke fintech license, one that could introduce a new nationwide payment infrastructure.

This is a massive deal. For years, fintech companies providing services like peer-to-peer wallets, remittances, payroll processing, bill payment, and prepaid cards faced a binary, unsatisfying choice: partner with a bank (expensive and restrictive) or obtain money transmitter licenses in every state (slow and equally expensive).

The industry has long sought a single national charter or a single state license that could be passported across borders similar to state banks  to provide payment services legally and safely at an affordable cost across the United States. The GENIUS Act may finally deliver that.

What the GENIUS Act Requires

Companies that qualify as Federally Qualified Payment Stablecoin Issuers (FQPSIs) under the Act must:

• Hold U.S. dollar reserves on a strict one-to-one basis
• Submit monthly certification of those reserves
• Implement robust anti-money laundering (AML) controls
• Refrain from rehypothecating reserves or paying interest to holders

Full implementation is targeted for 2026, with regulators required to finalize rules by July 18, 2026, and the FDIC has already proposed procedures for bank subsidiaries to issue stablecoins, signaling growing bank involvement.

The REMIT Act: Protecting the $500 Billion Remittance Market

While stablecoins grabbed headlines, another quieter but equally important bill emerged from the House in 2025: the Remittance Expense Minimization and Integrity for Transfers Act, or REMIT Act of 2025 (H.R. 4274).

Remittances are essential cross-border flows of funds from diaspora community members who sent money or goods from wherever they reside to their home countries. While typically only a few hundred dollars per transaction, the total remittance market is estimated by the International Monetary Fund to be over $500 billion globally.

Also Read: Bermuda Picks Filecoin in Bet on Web3 to Safeguard Public Data

The REMIT Act takes direct aim at a counterproductive policy dynamic that lawmakers have documented for years.

A 2016 report from the Government Accountability Office found that fines on remittances did not stop the flow of remittances, but rather led to consumers using unregulated transfer methods.

In other words: when you make legal money transfers more expensive through taxes and fees, people don’t stop sending money home they just start using underground networks. And those networks are exactly what bad actors exploit.

A July 2022 Department of the Treasury Financial Crimes Enforcement Network report reiterated longstanding financial-crime concerns about Informal Value Transfer Systems and noted that IVTS are being used to fund attempted terrorist attacks, including against the United States.

The REMIT Act would prohibit the federal government from imposing excise taxes or fees on licensed money transmitting businesses unless the Secretary of the Treasury certifies to Congress that such taxes are necessary and won’t push consumers into informal channels.

The CLARITY Act: Bringing Crypto Into the Money Transmission Framework

On another front, the Digital Asset Market Clarity Act of 2025 (H.R. 3633) is reshaping how crypto intersects with money transmission law.

Bitcoin and Ethereum would primarily fall under CFTC regulation as commodities, while securities-like assets would remain with the SEC. The bill also establishes registration requirements for digital commodity exchanges, brokers, and dealers creating a cleaner legal structure that avoids the gray zones that have plagued the industry.

Critically for money transmission, the CLARITY Act carves out an important exemption: entities that enter into digital asset transactions solely to facilitate payments whether through a payment service provider or on a peer-to-peer basis would not automatically be treated as “digital commodity brokers” subject to full CFTC registration. This matters enormously for fintech companies building crypto-based payment apps.

The CLARITY Act is a sweeping reform effort that passed the House in a 294-134 vote on July 17. The Senate Agricultural Committee and Senate Banking Committee are each planning to mark up Senate versions of the CLARITY Act.

The Big Picture: What’s Really Changing

Here’s a comparison of the old regulatory landscape versus what Congress is building:

Feature	Old System	New Framework (2025–2026)
Licensing	49 state licenses required	Potential federal “passport” license via GENIUS Act
Stablecoins	No federal framework	Comprehensive OCC/FDIC/Fed oversight
Crypto payments	Regulatory gray zone	Clarified under CLARITY Act
Remittance taxes	Discretionary	Restricted without Treasury certification
Informal networks	Poorly addressed	Identified as national security threat
Fintech bank access	Limited via partnerships	Fed exploring “skinny” master accounts

The Debanking Problem: A Parallel Battle

Any honest discussion of money transmission reform in 2026 has to address the debanking crisis a related issue that’s been boiling over in Congress simultaneously.

Debanking emerged as one of the most politically and regulatorily charged issues of 2025, with congressional committees releasing reports concluding that prudential regulators’ Biden-era policies had contributed to the unlawful debanking of digital asset and other lawful businesses.

The Senate Banking Subcommittee on Financial Institutions and Consumer Protections held a hearing titled “Ensuring Fair Access to Banking: Policy Levers and Legislative Solutions,” with Subcommittee Chair Thom Tillis emphasizing draft legislation that would require banks to provide documented justifications for denying services rather than citing vague “reputational risk” concerns.

When money transmitters including legitimate remittance services and crypto companies can’t access bank accounts, the entire payments ecosystem fractures. The new legislative push is designed to ensure that legal businesses can actually participate in the financial system.

What This Means for Fintech Companies

For fintech startups and established payment platforms, the new legislative landscape is a mixed bag of opportunity and new obligations.

The opportunity is real: a federal pathway to operate nationwide without obtaining 49 separate licenses could slash compliance costs by millions of dollars and years of delays. Companies that qualify as payment stablecoin issuers under the GENIUS Act may be able to offer payment services across state lines under a single federal regime.

But the obligations are serious too. Monthly reserve certification, strict AML requirements, and ongoing OCC oversight aren’t checkbox compliance they require robust operational infrastructure. The Act does not become effective until the earlier of 18 months after enactment (i.e., January 18, 2027), or 120 days after the implementing regulations are finalized.

Companies have a window now to prepare their compliance programs, reserve management systems, and reporting infrastructure before the rules go live.

What This Means for Consumers

For everyday Americans especially immigrant communities who regularly send money abroad these reforms could be transformative.

Lower compliance costs for legitimate money transmitters should, in theory, translate into lower fees for consumers. The remittance corridor from the U.S. to Latin America, for example, currently charges average fees of 5–7% per transaction. If regulatory costs fall, competitive pressure should push those fees lower.

The crackdown on informal value transfer systems also benefits consumers: while IVTS may charge lower fees upfront, they offer no consumer protections, no recourse if funds are lost, and no regulatory oversight.

What’s Still Unresolved

Despite the legislative momentum, significant questions remain heading into 2026.

State preemption battles are coming. The GENIUS Act preempts some state money transmitter licensing requirements, but states may decide to impose other requirements short of a license or charter, and those requirements may not be preempted. Expect legal challenges from states that see their regulatory authority being eroded.

Tax treatment of digital assets remains messy. The PARITY Act draft introduced by Ways and Means members in December 2025 aims to reform how crypto transactions are taxed, but lawmakers have set an aggressive goal to finish the legislation by the end of the first quarter of 2026, but that timeline could slip.

Market structure legislation still needs the Senate. While the CLARITY Act passed the House overwhelmingly, the Senate’s two relevant committees Agriculture and Banking need to coordinate their versions. Industry experts estimate a 50–60% chance that the bill will pass before the November 2026 midterms, though election-year politics and potential government funding deadlines could slow progress.

Internal Linking Opportunities

For websites covering financial regulation, payments, or fintech, here are strong anchor text ideas for internal linking:

• “state money transmitter licensing requirements” → link to a licensing guide
• “GENIUS Act stablecoin framework” → link to a stablecoin explainer
• “AML compliance for fintechs” → link to a compliance checklist
• “remittance fees explained” → link to a consumer guide
• “crypto regulation in the US” → link to a digital assets overview

Frequently Asked Questions

What is the GENIUS Act and how does it affect money transmission?

The GENIUS Act, enacted in July 2025, establishes the first nationwide federal regulatory structure governing payment stablecoins. It opens a potential national licensing pathway for fintech companies, allowing them to transmit funds nationwide without navigating 49 separate state licenses a game-changer for the payments industry.

Q: Does the REMIT Act affect how much it costs to send money internationally?

Potentially yes, the REMIT Act restricts the federal government from imposing new excise taxes or fees on licensed money transmitting businesses unless the Treasury Secretary certifies that those fees are necessary. The idea is to keep legitimate transfer services affordable so consumers don’t turn to unregulated underground networks.

What is an Informal Value Transfer System (IVTS) and why is Congress worried about it?

An IVTS is an underground network that moves money across borders without using the traditional banking system. Congress is concerned because these systems are used by bad actors including drug cartels and organizations evading currency controls to move illicit funds without leaving a paper trail.

When do the new money transmission rules take effect?

The GENIUS Act’s provisions are expected to take effect by January 18, 2027 at the latest (18 months after enactment), or 120 days after implementing regulations are finalized, whichever comes first. The CLARITY Act is still working through the Senate as of early 2026.

Will states lose authority over money transmitters?

Partially. The GENIUS Act preempts some state licensing requirements for qualifying stablecoin issuers. However, states may still impose requirements that fall short of a full license, and legal challenges from states asserting their regulatory authority are widely anticipated.

How does the CLARITY Act relate to money transmission?

The CLARITY Act clarifies that crypto-based payment facilitators companies using digital assets solely to enable payments won’t automatically be classified as digital commodity brokers subject to heavy CFTC regulation. This creates more breathing room for payment apps that use crypto on the backend.

Is this bipartisan?

To a significant degree, yes. The CLARITY Act passed the House 294–134 a wide bipartisan margin. The REMIT Act was introduced by a coalition of Democratic lawmakers. The GENIUS Act received bipartisan support, though implementation debates continue along partisan lines.