US money transmitter permissible investments
Under section 10.03 of the CSBS Money Transmission Modernization Act, a licensed money transmitter must hold permissible investments with a market value, under US GAAP, of at least its aggregate outstanding money transmission obligations at all times. Licensees report their permissible investments each quarter in Section III of the NMLS MSB Call Report, due within 45 days of the quarter end, and each state applies the version of the rule it has enacted.
This page explains the rules in general terms and is not legal or regulatory advice. Check the primary source and take advice on how the rules apply to your firm.
Jurisdiction: United States · Regulator: State money transmission regulators (CSBS model law)
Who is in scope
- A licensee must maintain at all times permissible investments with a market value, computed under US generally accepted accounting principles, of not less than the aggregate amount of all its outstanding money transmission obligations (MTMA section 10.03(a)). source
- Outstanding money transmission obligations are payment instruments or stored value sold to a person in the United States and not yet paid or refunded, and money received for transmission from a person in the United States that has not been received by the payee or refunded to the sender, in each case unless escheated (MTMA section 2.01(u)). source
- The model binds a licensee only where a state has enacted it. The CSBS state enactments chart dated 8 October 2026 lists 35 states with full or partial enactments, including three not yet in effect: Oklahoma (effective 1 November 2026), Alaska (effective 1 July 2027) and Delaware (effective on the earlier of 6 July 2027 or publication of regulations). source
- The CSBS MTMA page says money transmitters licensed in at least one state that has adopted the MTMA account for 99% of reported money transmission activity. source
- Permissible investments, even if commingled with other assets, are held in trust for holders of outstanding money transmission obligations if the licensee becomes insolvent or enters bankruptcy or receivership, and are not subject to attachment by other creditors (MTMA section 10.03(c)). source
- Virtual currency that a licensee controls for customers is held for them, is not the licensee's property, is not subject to creditors' claims and is deemed a permissible investment under the Act (MTMA section 13.05(c)). source
- Companies holding an MSB license during a calendar quarter must file the NMLS MSB Call Report, and Section III (Permissible Investments Report) is required for licensees engaged in money transmission. source
What the rule requires
| Requirement | How often | Source |
|---|---|---|
| Keep permissible investments at or above outstanding money transmission obligations at all times, not only at reporting dates (MTMA section 10.03(a)). | ongoing | source |
| Assets permissible without a cap include cash, deposits at federally insured institutions, cash equivalents such as ACH items in transit to the licensee and ACH items or international wires in transit to a payee, card-funded transmission receivables owed by a bank, AAA-rated money market funds, insured certificates of deposit, US and state government obligations, qualifying standby letters of credit and surety bond amounts above average daily liability (MTMA section 10.04(a)). | ongoing | source |
| Receivables from authorized delegates that are less than seven days old count up to 50% of total permissible investments, and receivables from any single delegate up to 10% (MTMA section 10.04(b)(1) and (2)). | ongoing | source |
| Rated short-term investments, commercial paper, rated bonds, US tri-party repos, money market funds rated from A- to below AAA, and funds made up only of uncapped permissible investments count up to 20% per category and 50% combined (MTMA section 10.04(b)(3)). | ongoing | source |
| Cash at foreign depository institutions counts up to 10% of total permissible investments if the licensee had a satisfactory rating in its most recent examination and the institution has an eligible rating, is registered under FATCA, is not in an OFAC-sanctioned country and is not in a FATF high-risk or non-cooperative jurisdiction (MTMA section 10.04(b)(4)). | ongoing | source |
| A licensee with control of virtual currency for customers must hold enough of each type of virtual currency to satisfy the aggregate entitlements of customers to that type (MTMA section 13.05(a)). | ongoing | source |
| The state regulator can limit by rule or order how far a specific investment counts if it represents undue risk not reflected in market value, and can allow other investments of sufficient liquidity and quality (MTMA section 10.03(b) and (e)). | ongoing | source |
| Keep a general ledger posted at least monthly containing all asset, liability, capital, income and expense accounts (MTMA section 7.06(a)(2)). | monthly | source |
| File audited financial statements prepared under US GAAP by an independent accountant within 90 days after each fiscal year end (MTMA section 7.02). | annual | source |
Deadlines
- Each licensee submits a report of condition, including a permissible investments report, within 45 days of the end of each calendar quarter (MTMA section 7.01(a) and (b)(3)); the model's commentary says this implements the NMLS MSB Call Report. source
- NMLS states that Call Report submissions must be completed within 45 days of the end of the calendar quarter, and that missing the deadline creates a license item that can prevent renewal and lead to regulatory action. source
- Georgia's Department of Banking and Finance lists quarterly MSB Call Report due dates of 15 May (Q1), 14 August (Q2), 14 November (Q3) and 14 February (Q4). source
- A letter of credit used as a permissible investment must renew automatically unless the issuer gives at least 60 days' notice of non-extension, and the licensee must then show, 15 days before expiry, that it will still meet section 10.03(a) (MTMA section 10.04(a)(4)). source
- A licensee must report to the regulator within one business day after it has reason to know of a bankruptcy or receivership petition or a proceeding to revoke or suspend a license (MTMA section 7.04(a)). source
Records and evidence
- Call Report Section III, reported at company level, lists deposits in domestic and foreign banks, cash on hand and in transit, card-funded transmissions, AAA money market funds, letters of credit, amounts due from authorized delegates, rated and unrated investments and US Treasury and agency securities (lines PI10 to PI100). source
- Section III reports a subtotal that excludes amounts above permissible investment caps (PI105), amounts pledged or restricted (PI110), the unrestricted total (PI115), total outstanding transmission liability (PI120) and average daily transmission liability for the quarter (PI130). source
- Virtual currency licensees also report virtual currency held for customers, virtual currency not held for customers, total virtual currency coverage and outstanding virtual currency liability in US dollars, using a quoted price in an active market (lines PI140 to PI180). source
- The Texas Department of Banking requires licensees to complete both the NMLS MSB Call Report and a Texas Permissible Investment Report within 45 days after each calendar quarter, keep it on file with quarterly financial statements and support, and have it reviewed at each examination; it is not sent to the Department unless the Department directs otherwise (memorandum of 13 November 2023). source
- The model requires records of each outstanding money transmission obligation, the general ledger, bank statements and bank reconciliation records, kept for at least [three] years, a bracketed figure that each enacting state sets (MTMA section 7.06(a)). source
Inputs when money sits across banks, partners and wallets
| Input | What it feeds | Rule |
|---|---|---|
| Ledger of every transfer received but not yet received by the payee or refunded, plus unpaid payment instruments and stored value | Outstanding money transmission obligations, the coverage test in section 10.03(a) and Call Report line PI120 | source |
| End-of-day balance at each insured US depository institution, including accounts held for the benefit of customers | Uncapped cash permissible investments (MTMA section 10.04(a)(1)) and Call Report line PI10 | source |
| ACH items and international wires in transit to payees, and ACH items in transit to the licensee | Cash equivalents under MTMA section 10.04(a)(1) | source |
| Balances at foreign banks, including accounts used to fund payouts abroad, with each bank's rating, FATCA registration and sanctions and FATF status | The 10% foreign deposit limit and its conditions (MTMA section 10.04(b)(4)) and Call Report lines PI20 and PI21 | source |
| Receivables from each authorized delegate, aged in days | The 50% cap on delegate receivables under seven days old and the 10% single-delegate cap (MTMA section 10.04(b)(1) and (2); Call Report lines PI61 to PI63) | source |
| Securities and fund holdings with ratings and market values | Category caps of 20% and 50% (MTMA section 10.04(b)(3)) and market value under US GAAP (section 10.03(a)) | source |
| Amounts pledged or otherwise restricted | Deducted to reach the unrestricted total on Call Report line PI115 | source |
| Virtual currency held for customers, by type, with US dollar values at an active-market quoted price | Per-type coverage under MTMA section 13.05(a) and Call Report lines PI140 to PI180 | source |
| Average daily money transmission liability for the quarter | Call Report line PI130 and the surety bond calculation in MTMA section 10.02 | source |
| Stablecoins carried on the balance sheet, with their redemption terms | CSBS guidance of March 2026 treats on-balance-sheet fiat-backed stablecoins with an unconditional contractual right to redeem for cash at par as tangible assets for the tangible net worth test in section 10.01, a separate test from permissible investments | source |
| Each licensing state's enacted statute and effective date | Binding caps and asset lists follow each state's enacted text, not the model | source |
Where Polynopsis fits
Polynopsis gives finance teams one read-only, timestamped position across every bank, payout partner, exchange and wallet, which is the balance data a safeguarding reconciliation starts from. It is not safeguarding or reconciliation software, and it works alongside the tools and processes firms use to meet these rules.
Frequently asked questions
Can stablecoins count as permissible investments under the MTMA?
The asset list in section 10.04 does not name stablecoins. Section 13.05 deems virtual currency a licensee controls for customers a permissible investment, and section 13.05(a) requires enough of each type to meet customer entitlements to that type. CSBS guidance from March 2026 on fiat-backed stablecoins addresses tangible net worth, not permissible investments.
How often are permissible investments reported?
Quarterly. The permissible investments report is part of the NMLS MSB Call Report, due within 45 days of each calendar quarter end. Some states add their own form; Texas, for example, requires a Texas Permissible Investment Report kept on file for examination.
Do international wires on their way to a payee count?
Yes, under the model. Section 10.04(a)(1) includes ACH items or international wires in transit to a payee among cash equivalents, with no percentage cap.
Do balances at foreign banks count?
Up to 10% of total permissible investments under section 10.04(b)(4), and only if the licensee had a satisfactory rating in its most recent examination and the foreign bank meets the rating, FATCA, sanctions and FATF conditions.
Other rules
Sources
- CSBS Money Transmission Modernization Act (model law text) · Conference of State Bank Supervisors
- MTMA State Enactments (8 October 2026) · Conference of State Bank Supervisors
- CSBS Money Transmission Modernization Act (MTMA) · Conference of State Bank Supervisors
- MTMA Guidance: Stablecoin Tangibility (March 2026) · Conference of State Bank Supervisors
- MSB Call Report: Reporting Frequency · Nationwide Multistate Licensing System (NMLS)
- MSB Call Report Section III: Permissible Investments Report · Nationwide Multistate Licensing System (NMLS)
- Money Transmission Permissible Investment Reports (memorandum, 13 November 2023) · Texas Department of Banking
- Quarterly MSB Reporting · Georgia Department of Banking and Finance
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