United States – Michigan

Licensing, Authorisation & Market Access

Michigan's money-transmission licensing framework under the Money Transmission Services Act (MCL 487.1001-487.1047) is mid-transition. House Bill 5544, the Money Transmission Modernization Act, would repeal this current statute effective July 1, 2027 and replace it with the Conference of State Bank Supervisors model licensing regime. The bill passed the Michigan House by a vote of 97-10 on June 25, 2026 and has been pending in the Senate Finance, Insurance, and Consumer Protection Committee since July 1, 2026. The replacement regime would bring Michigan into alignment with the CSBS model law framework already adopted in some form by a large number of other states, a structural shift toward multistate-examination acceptance intended to reduce duplicative state-by-state licensing burden for money transmitters operating across multiple jurisdictions.

A distinguishing feature of the pending replacement is a like-kind virtual-currency reserve requirement: a licensee transmitting virtual currency would be required to hold like-kind virtual currency of the same volume obligated to consumers. This provision extends the licensing framework's reach into crypto-asset operators specifically, a market-access condition that does not exist under the current statute. For payment companies and crypto-asset operators either currently licensed in Michigan or considering market entry, the open question is the ultimate shape and timing of this replacement regime, since the bill remains in committee with no confirmed Senate timeline.

Outlook

Whether the Senate Finance, Insurance, and Consumer Protection Committee acts on HB 5544 before the legislative session recesses is the key near-term variable. If passed in its current form, the new licensing regime, including the virtual-currency reserve requirement, would take effect July 1, 2027, materially changing market-access conditions for payment companies and crypto-asset operators licensed to transmit money in Michigan.

Conduct, Safeguarding & Financial Promotions

Michigan's non-bank payment-institution and e-money-issuer sector faces a modernizing conduct and licensing framework this cycle, driven by two companion bills moving through the state legislature. House Bill 5544 proposes full adoption of the Conference of State Bank Supervisors' Money Transmission Modernization Act template, including its treatment of payroll processors as licensable money transmitters, while Senate Bill 835 proposes the same core template with a payroll-processor exemption, treating such processors as agents of the payor rather than as entities requiring separate licensure. Both bills form part of a broader 31-state modernization wave coordinated through the CSBS template, under which participating states adopt harmonized net-worth, surety-bond, and permissible-investment standards for licensed money transmitters. This is a High-confidence, directly-sourced legislative development, evidenced by CSBS's own tracked legislative update, though neither bill has been enacted this cycle.

The conduct-and-safeguarding significance of this modernization effort lies less in any single provision than in the broader alignment it represents: Michigan's money-transmission licensing regime would move toward the more contemporary, harmonized standard that a majority of US states have now adopted or are adopting. For non-bank payment institutions and e-money issuers licensed in Michigan, this creates a forward-looking conduct expectation: capital, safeguarding, and permissible-investment standards are likely to converge toward the CSBS template's baseline, even though the precise terms remain unsettled pending enactment.

The payroll-processor question captured in the divergence between the House and Senate bills is itself a conduct-classification issue with direct financial-promotions and product-scope implications: whether a payroll processor is treated as an agent of the payor (exempt, per the Senate version) or as a licensable money transmitter in its own right (per the House version) determines whether that class of non-bank payment intermediary carries the full weight of Michigan's money-transmission conduct obligations, including bonding, net-worth, and associated safeguarding standards for customer funds. This is a bank-versus-non-bank-adjacent distinction in substance, since it determines which category of non-bank intermediary is drawn into the state's licensed-conduct perimeter and which remains outside it.

Outlook

The decisive near-term event for this domain is the legislative fate of House Bill 5544 and Senate Bill 835, expected to remain live through the fourth quarter of 2026; enactment of either bill, and in particular resolution of the payroll-processor exemption question between the House and Senate versions, would settle the conduct-classification question for that category of non-bank payment intermediary and would be the appropriate trigger to revisit this domain's signal level. Passage would also be the clearest evidence yet that Michigan intends to align fully with the 31-state CSBS modernization wave rather than retain its current, less harmonized standard.

Legal & Litigation

Coinbase Financial Markets, Inc. stipulated with the Michigan Gaming Control Board to stop offering new sports-related event contracts to Michigan customers and to close out open positions by 12:00 a.m. Eastern time on October 10, 2026. Under the stipulation, the MGCB agreed not to pursue enforcement against Coinbase pending resolution of a Sixth Circuit appeal. This settlement follows a similar agreement reached by Robinhood on September 9, 2026, leaving Kalshi as the remaining operator subject to an injunction in this contested Michigan product segment.

A Commodity Futures Trading Commission interim final rule, effective October 19, 2026, bears directly on this litigation: the rule excludes wagers placed with state- or tribal-licensed sportsbooks and casinos from the Commodity Exchange Act's swap definition. This federal action undercuts the federal-preemption defense that Coinbase, Kalshi, Robinhood and Polymarket have raised against Michigan Gaming Control Board enforcement in the pending Sixth Circuit appeal, strengthening the state's position that sports-related event contracts fall within its own gambling-licensing jurisdiction rather than under federal derivatives oversight.

Outlook

The Sixth Circuit's resolution of the federal-preemption question, now considered against the CFTC's new interim final rule, is the central variable to watch. A ruling against the preemption defense would likely confirm Michigan's gambling-licensing jurisdiction over sports-related event contracts, directly affecting Kalshi's ongoing injunction and any other platform contemplating a similar product in the state.

Correspondent Banking, Settlement & Access

Michigan-licensed payment and gaming-sector respondents face a widening federal overlay this cycle that bears directly on correspondent-banking settlement and access decisions, even though no Michigan-specific correspondent-banking instrument moved. Two federal developments define the picture. First, the Corporate Transparency Act's beneficial-ownership-information reporting rule now exempts domestic entities and their beneficial owners from reporting, limiting the mandatory disclosure regime to foreign entities only; this High-confidence finding is corroborated directly by FinCEN's own published guidance. Second, the Financial Crimes Enforcement Network's proposed overhaul of AML/CFT program-effectiveness standards under 31 CFR Part 1021 would require board-level governance approval, a documented risk-assessment methodology, and a US-located responsible officer for BSA-regulated institutions, including casinos; this Assessed-confidence proposal's comment period closed June 9, 2026, with the final rule still pending.

The analytical spine of correspondent-banking analysis is the asymmetry between bank and non-bank access: chartered banks generally carry direct, long-standing correspondent relationships and dedicated compliance infrastructure to satisfy a correspondent's due-diligence requirements, while non-bank payment institutions, e-money issuers, and money-services businesses typically access settlement rails indirectly, through a sponsoring bank or a thinner set of correspondent relationships that are more sensitive to shifts in the underlying compliance backdrop. Both federal developments this cycle widen that asymmetry rather than narrow it. The beneficial-ownership reporting narrowing reduces the ownership-transparency information a correspondent can obtain through federal registries when assessing a Michigan-registered non-bank respondent, shifting more of that verification burden onto the correspondent's own customer due-diligence program. The Part 1021 proposal, while nominally targeted at casinos and card clubs rather than non-bank payment institutions directly, raises the governance bar for an entire category of BSA-regulated institution that shares infrastructure and customer bases with Michigan's licensed payments ecosystem, and a correspondent assessing settlement risk for gaming-adjacent payment flows would reasonably read the proposal as raising the compliance standard its respondent must be able to evidence.

Neither development is Michigan-specific in its drafting, but both reach Michigan directly: Michigan's Detroit commercial casinos and tribal gaming operations are Part 1021-regulated institutions, and Michigan-registered payment and money-services entities are subject to the same federal beneficial-ownership reporting rule as any other US-registered entity. The correspondent-banking read for this cycle is accordingly one of federal-overlay tightening on the governance and transparency dimensions, layered onto a licensing framework that itself remains in a modernization-pending state.

Outlook

The Office of Management and Budget's review of the Corporate Transparency Act final rule, expected in the fourth quarter of 2026, and the FinCEN Part 1021 rule's anticipated finalization in the first quarter of 2027, are the two events that will determine whether this cycle's tightening trajectory continues, stabilizes, or reverses. A correspondent bank recalibrating its risk appetite for Michigan-licensed payment and gaming-sector respondents should treat both as live inputs; neither has reached a final, settled state this cycle.

Commercial Intelligence & Fintech

Coinbase Financial Markets, Inc.'s Michigan sports-related event-contract product line was wound down under a stipulated agreement with the Michigan Gaming Control Board, effective October 10, 2026. No monetary amount was disclosed in connection with this restructuring. The regulatory review by the Michigan Gaming Control Board concluded with the arrangement cleared with conditions: Coinbase ceased offering new sports-related event contracts to Michigan customers and closed out open positions by the effective date, while the MGCB agreed to withhold enforcement pending the outcome of a Sixth Circuit appeal. This follows a similar product wind-down previously agreed by Robinhood for its own Michigan sports-related event-contract offering on September 9, 2026.

Outlook

Whether Kalshi, the remaining operator still offering sports-related event contracts in Michigan under an active injunction, reaches a similar negotiated wind-down or instead prevails on its federal-preemption argument before the Sixth Circuit will determine whether this product line sees a complete exit from the Michigan market or a partial survival contingent on the litigation's outcome.