Crypto Business Classification Tool

Published: March 12, 2025 • Stocks, Crypto & NFTs

Answer a few questions to identify your regulatory categories and compliance requirements

1. What services does your business provide?

Select all that apply to your current or planned business activities.

✓ Select all that apply

Exchange services Facilitating trades between different cryptocurrencies or between crypto and fiat

Wallet or custody services Storing or managing crypto assets or private keys on behalf of users

Mining or validation services Operating mining equipment, staking, or participating in network validation

Token issuance or offering Creating, selling, or distributing new tokens or cryptocurrencies

Payment processing Facilitating payments or transfers between parties using crypto

DeFi services Offering lending, borrowing, yield farming, or other decentralized finance services

NFT marketplace or services Trading, creating, or managing non-fungible tokens

Investment advice or portfolio management Providing guidance on crypto investments or managing assets for clients

2. Does your business take custody of customer funds or private keys?

Custody refers to storing, controlling, or having access to customers’ crypto assets or their private keys.

Yes, we take full custody We control private keys and/or directly hold customer funds

We have partial custody or multi-sig arrangements We hold one of multiple keys or have conditional access to funds

No, we never take custody We are completely non-custodial and never control customer funds

Why does custody matter?

Custody is a key factor in determining which regulations apply to your business. Custodial services typically face more stringent requirements, including money transmission laws, BSA/AML compliance, and potential capital requirements. Non-custodial services may avoid certain regulations but still face others depending on their specific activities.

3. Does your business handle fiat currency or provide conversion between fiat and crypto?

This includes accepting or remitting traditional currencies like USD, EUR, etc. in connection with crypto services.

Yes, we directly handle fiat currencies We accept, hold, or transfer fiat as part of our operations

We facilitate fiat transactions through partners Third-party payment processors or partners handle the fiat portion

No, crypto-only operations We deal exclusively in cryptocurrencies with no fiat conversion

4. In which jurisdictions does your business operate or serve customers?

Select all that apply to your current or planned operations.

✓ Select all that apply

United States (federal level) Subject to US federal regulations like FinCEN, SEC, CFTC

Multiple US states Operating in various US states with their own regulations

European Union Subject to EU regulations including MiCA, AMLD5/6

United Kingdom Subject to UK FCA regulations

Asia (Japan, Singapore, Hong Kong, etc.) Operating in Asian jurisdictions with crypto regulations

Global operations Serving customers globally without jurisdictional restrictions

Each jurisdiction has its own regulatory requirements. Your classification may vary by location, and you may need multiple licenses or registrations depending on where you operate.

5. If your business issues, sells, or works with tokens, what features do they have?

Select all that apply to the tokens you issue, sell, or interact with.

✓ Select all that apply (if relevant)

Investment/profit potential Tokens are marketed or designed for investment returns or price appreciation

Governance or voting rights Tokens confer voting rights or influence over the project

Utility functions only Tokens are solely used to access services or functionality

Staking or yield-generating Tokens can be staked or used to generate returns

Represent real-world assets Tokens represent ownership of external assets (real estate, securities, etc.)

Not applicable We don’t issue or directly interact with tokens

Why does this matter for classification?

Token characteristics significantly impact regulatory classification. Tokens with investment features, profit potential, or that represent ownership may be classified as securities subject to SEC regulation. Utility tokens with no investment aspects may avoid securities regulation but could still fall under other regulatory frameworks like commodity regulations (CFTC) or money transmission laws depending on how they’re used.

6. Who are your primary customers or users?

Select the types of customers you primarily serve or plan to serve.

Primarily retail consumers/individuals General public users with no special qualifications

Accredited investors or qualified purchasers High net worth individuals or qualified investors

Institutional clients Financial institutions, funds, corporations, or businesses

Mixed customer base Serving both retail and institutional clients

7. What is your business structure and operational approach?

Select the option that best describes how your business operates.

Centralized business Traditional company structure with centralized control and operations

Hybrid model Some decentralized aspects but with centralized components or governance

DAO or fully decentralized Decentralized autonomous organization or similar structure

Software developer only We only develop and publish software without operating services

How does structure affect regulation?

Your business structure affects how regulations apply. Centralized businesses have clear entities to regulate and hold accountable. Decentralized structures may face regulatory challenges as many laws assume centralized control. Pure software developers may have fewer direct regulatory obligations, but this depends on their level of ongoing involvement and control over the platforms they create.

Analyzing your regulatory profile…

Your Crypto Business Classification

Based on your answers, your business likely falls under these regulatory categories:

Money Services Business (MSB)

Your activities indicate you’re likely classified as a Money Services Business under FinCEN regulations, requiring registration and compliance with Bank Secrecy Act provisions.

Regulatory Complexity Level

Medium

Your business model involves multiple regulated activities across different jurisdictions, creating a complex compliance landscape that requires careful navigation.

Your Regulatory Classifications:

Money Services Business (MSB) Primary

Businesses that transmit or convert money, including many crypto exchanges and payment services.

Key Compliance Requirements:

Registration with FinCEN within 180 days of establishment (see our MSB registration guide)
Implementation of AML/KYC programs
Filing of Suspicious Activity Reports (SARs)
Recordkeeping for transactions over certain thresholds
Regular independent compliance reviews

Key Regulatory Agencies:

FinCEN
State regulators

Money Transmitter Secondary

Entities that transfer funds between persons or locations, including crypto transfers. Requires state-by-state licensing in most US states.

Key Compliance Requirements:

State-specific money transmitter licenses
Surety bonds (varying by state)
Minimum net worth requirements
State examination and reporting
Consumer disclosures

Key Regulatory Agencies:

State banking departments
State financial regulators

Need guidance on crypto compliance?

Crypto regulations are complex and constantly evolving. Schedule a consultation to discuss your specific situation and develop a compliance strategy tailored to your business.

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