Smart Contract Payments and Money Transmitter Licensing (FK-A030, Faisal Khan LLC, April 2026) is a ten-question FAQ answering the question the firm says it hears almost every week: if a smart contract moves the money, does the platform still need a money transmitter license?
The scenario: a cross-border payments app where the company never holds funds — payment sits in a smart contract until conditions are met, the platform's software locks and executes the payout, and its servers submit transactions and pay network fees. The short answer is yes: if a platform can trigger, block or relay customer funds, even through a contract it never "holds," it is performing money transmission under federal law and most state law. As the guide puts it, "custody is not the legal test and never has been" — control substitutes for custody.
FinCEN's 2019 four-factor guidance (FIN-2019-G001) is the operative test, and two factors fail here: the platform's servers submit transactions, and funds move only when its software executes. The guide contrasts this with a true decentralized exchange, where no operator function exists over user funds — a distinction no money transmission case has yet crossed in a decade of crypto enforcement.
Prosecution examples carry real weight: the Tornado Cash conviction in August 2025, Samourai Wallet's guilty pleas with five- and four-year sentences and a $237 million forfeiture, and BTC-e's $110 million FinCEN penalty. Operating without a required license is a federal felony under § 1960 regardless of whether the operator knew a license was required.
What the guide covers:
- Why "non-custodial" doesn't answer the licensing question
- The payment processor and integral service exemptions, and why both fail here
- A three-question self-test: can the system move funds, do servers submit transactions, does fiat touch any leg
- Four compliant paths, from licensed sponsorship to phased direct licensing
- Why launching first and fixing licensing later creates disclosure problems for every future application