Recently a friend of ours (we’ll call him “George”) went through a situation that’s, unfortunately, all too common for those running cryptocurrency businesses.
From exchanges to kiosks/ATMs, a variety of cryptocurrency businesses are subject to state-level money transmitter licensing (MTL) regulations and we all know how much of a pain they can be.
But George has a reporting fiasco tale that may just take the cake.
Recently, George was handling reporting duties for a state that shall remain nameless. This state uses the Nationwide Multistate Licensing System (NMLS) as well as one unique form you have to file separately. Seems simple enough, right? A quick trip through NMLS, submitting literally one piece of paper, and then you’re done! If only it were so easy.
What George didn’t know was that the delivery method for this form changed since the last time he had filed. In fact, it had changed three times in the previous 18 months. At first, everyone was instructed to use a web form to complete and submit. Later it changed to a PDF you had to print off the website and then email before going back to the web form a short time later. There was no warning about these changes for business owners but missing the deadline, even by an hour, still meant a $1,000 fine.
I’m sure you can guess how the rest of the story goes. Since George was still familiar with the PDF submission requirement, that’s the route he took. He actually thought nothing of it until a few weeks later when he got hit with correspondence from the state about his failure to file as well as a $1,000 fine.
Why is reporting so difficult?
To be fair, this isn’t necessarily the fault of the state. George should have been keeping up with changes and making sure that he was working with the most recent information. Still, it can be hard to keep up with ever-fluctuating deadlines, reporting requirements, and filing instructions. And this is just one state we’re talking about! Imagine operating in a dozen states as a kiosk operator, or all 50 as an exchange. The point is, every state is different and it’s becoming increasingly difficult for business owners in the cryptocurrency sphere to get – and keep – a grip.
A myriad of state requirements
So, how different can each states’ regulations be? Some states only use their own portal rather than the NMLS, such as Florida’s FLOFR system. In other states, such as Arizona, Colorado, Delaware, and New York, some reporting is done through NMLS but certain parts must be done through their own portal. Finally, some states, like Georgia, use NMLS but also require you to submit certain documents via a sharelink file, similar to a Dropbox setup. In short, it’s totally all over the place.
The NMLS dilemma
While many of us groan at the thought of using the clunky, outdated interface of the NMLS, it’s actually the easier reporting platform when compared with most states’ because it’s uniform across the country and puts all state reporting in one place. You simply log into your account, select the state license you want to renew, make the appropriate attestations, make the payment, and hit “Submit.” It’s a straightforward process with little room for uncertainty or mistakes.
The problem is that every state is different and when some states use a hybrid of NMLS and their own portal, or just their own portal and no NMLS at all, it creates a ton of confusion. Costly confusion.
The industry’s solutions aren’t working
George’s was an expensive lesson to learn, one we hope others don’t have to experience. To date, the crypto industry has been coping with rapidly increasing state rules with a hodgepodge of spreadsheets, calendars, document management applications, emails with colleagues, and constant contact with regulators.
These tools can’t automatically create calendar items and to-dos nor can they populate the forms you need to submit, so every step of reporting must be done manually. There’s also no synchronization of these tasks, documents, and calendar items, so no one knows if the information on either application is up to date and reliable. And trust me, you don’t want to have out-of-date information when it’s time to submit your renewal.
Trying to keep all of this organized – not to mention synced – is all but impossible, especially as you add more states to the mix. And keep in mind that even if your cryptocurrency business doesn’t report to many states right now, the wave of state-level MTL regulation that started in 2020 is continuing in full force through 2022 and beyond. This means that even more trouble is already on your doorstep, even if you can’t see it yet.
ComplyFit can help
This story isn’t just George’s, it’s one that’s been told innumerable times in this industry. But what can you do? ComplyFit has the answer.
Here at ComplyFit we don’t just talk the talk, the company has been walking the walk in the cryptocurrency space for years, and the compliance space even longer. We’re a company that understands your frustration – and your real needs.
First and foremost, we take all of the guesswork out of what, how, and when, you’re supposed to submit for state-level MTL compliance. Our system keeps track of changes to state laws and automatically updates your dashboard with the documents you need as well as deadlines and submission requirements. You’ll receive alerts on the dashboard, as well as via email if you prefer, to increase the odds that you never miss a deadline. Outstanding compliance tasks are front and center and are automatically marked complete once they’re done to eliminate confusion.
ComplyFit’s record-keeping tools and functions eliminate the need for spreadsheets and databases and reduce manual data entry. Everything is organized and easily searchable to ensure that what you need is always on hand. And everyone who has access to the dashboard sees the same real-time information, providing a single version of the truth.
In short, creating, organizing, and managing reports, regulator correspondence, in-progress and submitted documents, and other compliance records becomes a painless process.
How good does this sound? How much weight would this take off of your shoulders? Are you ready to see the ComplyFit solution in action? Schedule a demo and let us help you take full control of compliance.