On July 1, 2026, Virginia House Bill 1942 goes into effect, overhauling the Commonwealth’s money transmission regulatory framework and replacing Chapter 19 of Title 6.2 of the Code of Virginia in its entirety with a new Chapter 19.1, titled “Money Transmitters.” The new Chapter adopts the language of the Money Transmission Modernization Act (“MTMA”), the model law developed by the Conference of State Bank Supervisors to modernize and harmonize state-level money transmission regulation. Virginia joins over thirty states that have now adopted the MTMA, in whole or in part. The new law will affect virtually every aspect of the regulatory regime: definitions, scope, licensing requirements, net worth and surety bond standards, permissible investments, authorized delegate oversight, acquisition of control procedures, reporting obligations, consumer protections, and multistate coordination.
Consolidation of License Types
One of the most structurally significant changes under the new Chapter 19.1 is the elimination of the standalone “money order seller” license. Under former Chapter 19, Virginia separately regulated money order sellers and money transmitters as distinct license types. The new law consolidates both activities under a single money transmitter license. Selling or issuing payment instruments, including money orders, traveler’s checks, and their electronic equivalents, is now simply one of three activities constituting “money transmission” under the new statutory definition, alongside selling or issuing stored value and receiving money for transmission. Entities previously licensed solely as money order sellers must now comply with the full money transmitter licensing framework under Chapter 19.1.
Expanded and Modernized Definitions
The new section 6.2-1922 significantly expands Virginia’s definitional framework, with several key changes. The definition of “money transmission” has been substantially revised and modernized and now expressly includes payroll processing services. “Virtual currency” is expressly excluded from the definition of “money,” meaning that businesses engaged solely in transmitting virtual currency, without also engaging in the transmission of money, payment instruments, or stored value, may fall outside the scope of Chapter 19.1. “Virtual currency” is defined as a digital representation of value used as a medium of exchange, unit of account, or store of value that is not money, whether or not denominated in money. The practical application of this exclusion and the SCC’s enforcement position remains to be clarified, and virtual currency businesses may remain subject to other state or federal regulatory frameworks.
Additionally, “control” is redefined with a higher ownership threshold. Former law treated any person owning or controlling a 10% or greater interest as a “principal” subject to regulatory scrutiny. Under the new law, “control” means the power to vote at least 25% of outstanding voting shares, elect or appoint a majority of key individuals or executive officers, or exercise a controlling influence over management or policies. This change is significant for entities with investors holding interests in the 10–25% range, who may now fall outside the definition of control; however, persons with smaller ownership interests can still be deemed to exercise control based on their ability to direct management or policies.
New Tiered Net Worth Requirement
The former section 6.2-1906 required each licensee to maintain a net worth of not less than $200,000, or a higher amount not to exceed $1 million as determined by the State Corporation Commission (“SCC” or the “Commission”). The new section 6.2-1950 replaces that flat requirement with a tiered, asset-based formula using the concept of “tangible net worth,” defined as aggregate assets excluding all intangible assets, less liabilities:
· For licensees with total assets of $100 million or less: the greater of $100,000 or 3% of total assets.
· For licensees with total assets between $100 million and $1 billion: $3 million plus 2% of assets in excess of $100 million.
· For licensees with total assets exceeding $1 billion: $21 million plus 0.5% of assets in excess of $1 billion.
Smaller licensees may benefit from the reduced floor, the minimum drops from $200,000 to $100,000, while larger operators will face substantially higher requirements scaled to the size of their balance sheets.
Surety Bond Activity-Based Calculation
The new section 6.2-1951 replaces the prior surety bond structure with a formula-driven approach tied to actual transmission activity. The minimum security amount is the greater of $100,000 or 100% of the licensee’s average daily money transmission liability in Virginia for the most recent quarter, up to a maximum of $1 million. Alternatively, if the licensee’s tangible net worth exceeds 10% of total assets, the minimum drops to $100,000. Licensees that maintain a bond at either cap are not required to calculate average daily liability. The surety bond must remain in place for five years after a licensee ceases money transmission activities, and cancellation requires 90 days’ written notice to the Commission.
Detailed Categories and Percentage Limits for Permissible Investments
The new section 6.2-1952 retains the existing all-states measurement approach but updates the terminology to refer to ‘outstanding money transmission obligations. Section 6.2-1953 establishes a significantly more detailed and structured list of permissible investment categories. Unrestricted investments include cash and deposits in federally insured institutions; ACH items in transit; cash in transit via armored car, in smart safes, and in licensee-owned locations; debit and credit card-funded transmission receivables owed by a bank; AAA-rated money market mutual funds; certificates of deposit or senior debt of insured depository institutions; U.S. government obligations; and irrevocable standby letters of credit naming the Commission as beneficiary.
Additional categories are permissible subject to percentage caps: authorized delegate receivables less than seven days old are capped at 50% of total permissible investments (with no single delegate exceeding 10%); commercial paper, short-term investments, repurchase agreements, lower-rated money market funds, and composite investment funds are each capped at 20% per category and 50% combined; and deposits at foreign depository institutions meeting applicable FATCA, OFAC, and FATF requirements are limited to 10%.
New Formal Pre-Approval Process for Acquisition-of-Control
Former Chapter 19 contained no formal acquisition-of-control process. The new section 6.2-1936 fills that gap. Any person, or group of persons acting in concert, seeking to acquire control of a Virginia money transmitter licensee must now obtain written approval from SCC before completing the acquisition. The process requires submission through NMLS and payment of a $1,000 nonrefundable fee. The Commission has 60 days from the date an application is deemed complete to approve or deny it; if no action is taken within that period, the application is deemed approved.
The SCC will evaluate the financial condition, business experience, competence, character, and general fitness of both the acquiring person and any proposed new key individuals. Unauthorized acquisitions of control may result in a Commission divestiture order following 21 days’ written notice and an opportunity to be heard. Limited exemptions apply, including acquisitions by devise or descent, court-appointed fiduciaries, and public securities offerings.
Comprehensive New Requirements for Authorized Delegate Oversight
Former Chapter 19 contained limited provisions governing the licensee-delegate relationship. The new section 6.2-1944 establishes a detailed framework. Before conducting business through authorized delegates, licensees must adopt written policies and procedures designed to ensure delegate compliance with applicable law, enter into a written contract meeting specific statutory minimum requirements, and conduct a reasonable risk-based background investigation of each delegate.
Required contract provisions include designation of the delegate’s authority, scope of the relationship, a legal compliance obligation, a trust on money received net of fees for the benefit of the licensee, record preparation and maintenance obligations, and an acknowledgment of the SCC’s examination authority. Authorized delegates must hold all money received from money transmission, net of fees, in trust for the licensee; commingled funds are treated as trust funds up to the amount received.
Subdelegation is expressly prohibited. An authorized delegate may not appoint another person to conduct money transmission on behalf of the licensee. If the licensee’s license is suspended, revoked, surrendered, or expires, the licensee must notify all authorized delegates within five business days, at which point all delegates must immediately cease money transmission activity.
Enhanced Application Disclosures and NMLS Integration
The new section 6.2-1931 substantially expands license application requirements. In addition to standard business information, applicants must now provide: a 10-year litigation and criminal conviction history for the applicant and all persons in control; a list of other states where the applicant is licensed and any disciplinary actions taken; information about any bankruptcy or receivership proceedings; 10-year employment histories for all key individuals and persons in control; audited financial statements for the most recent fiscal year and the two preceding years; certified unaudited financial statements for the most recent fiscal quarter; a description of money transmission previously provided; a list of proposed authorized delegates; and the name of any federally insured depository institution through which the applicant intends to conduct money transmission. The application fee remains $1,000.
The new section 6.2-1930 expressly authorizes the SCC to utilize NMLS for all aspects of the chapter, including applications, acquisitions of control, surety bonds, reporting, criminal background checks, credit checks, fee processing, and examinations, and to participate in multistate licensing protocols.
Quarterly Reports of Condition
The new section 6.2-1938 replaces the general periodic reporting requirement of former law with a specific quarterly report of condition, due within 45 days after the end of each calendar quarter. Reports must include financial information at the licensee level, nationwide and state-specific money transmission transaction data for every U.S. jurisdiction where the licensee operates, a permissible investments report, and, in the fourth-quarter annual report only, transaction destination country reporting. The SCC is authorized to require submissions through NMLS.
Expanded Exemptions
The new section 6.2-1923 provides a more detailed and comprehensive set of exemptions than former Chapter 19. In addition to retaining exemptions for federally insured depository institutions and government entities, the new law adds explicit exemptions for operators of payment systems providing processing, clearing, or settlement services between exempt persons or licensees; agents of payees collecting payments for goods and services under specified conditions; intermediaries processing payments between a licensed or exempt entity and the sender’s designated recipient; third-party service providers to exempt entities; boards of trade designated as contract markets under the Commodity Exchange Act; registered futures commission merchants; registered securities broker-dealers; individuals employed by licensees acting within the scope of employment; and agents of payors providing payroll processing services.
Consumer Protections – Receipts and Refunds
The new Chapter 19.1 adds explicit consumer protection provisions, not found in former law. Licensees must provide refunds to senders within 10 days of receiving a written refund request under specified conditions, and must provide receipts for money received for transmission containing specified information, including the amount transmitted in U.S. dollars, applicable fees, the exchange rate if applicable, and the date of the transaction. These provisions do not apply to transactions governed by the federal Remittance Rule, non-consumer transactions, or payroll processing services.
Enforcement
The civil and criminal penalty structure under the new Chapter 19.1 is substantively unchanged from former law. The SCC may impose civil penalties of up to $2,500 per violation, with each money transmission transaction constituting a separate violation of the license requirement. Unlicensed money transmission continues to constitute a Class 1 misdemeanor.
What This Means for the Money Transmission Industry
Virginia’s enactment of the MTMA represents one of the most comprehensive overhauls of its money transmission regulatory framework in the state’s history. For existing Chapter 19 licensees, priorities are assessing compliance with the new net worth and surety bond requirements, reviewing and updating authorized delegate contracts and oversight policies, evaluating ownership and control structures in light of the revised 25% control threshold, and preparing for enhanced reporting obligations beginning with the first quarterly report of condition due after July 1, 2026. Entities seeking to acquire control of a Virginia licensee must factor the new pre-approval process into their transaction timelines. The existing SCC regulations at 10 VAC 5-120 reference former Chapter 19 and will require updating; operators should monitor the SCC for transition guidance and any interim regulatory direction as the Commission begins implementing Chapter 19.1.
For virtual currency businesses, the new law’s treatment warrants particular attention. The express exclusion of virtual currency from the definition of “money” means that businesses engaged solely in virtual currency transmission are not automatically subject to licensure under Chapter 19.1, a meaningful departure from the ambiguity that existed under former law, and a point of differentiation from states that have moved to bring virtual currency transmission squarely within their money transmitter licensing frameworks. That said, the exclusion is not a blanket safe harbor. Virtual currency businesses that also sell or issue payment instruments, handle stored value, or receive fiat currency for transmission will still need to carefully assess whether any component of their activity triggers a Chapter 19.1 licensing obligation. Additionally, the interaction between the new virtual currency exclusion and Virginia’s existing regulatory authorities, including any enforcement posture the SCC may develop under Chapter 19.1, remains to be seen. Virtual currency businesses operating in or entering the Virginia market should treat the effective date as an opportunity to conduct a fresh licensing analysis under the new framework rather than relying on prior determinations made under former Chapter 19.