On April 18, 2025, Colorado enacted the Model Money Transmission Modernization Act (MTMA) (HB 25-1201), which repeals and replaces the state’s previous Money Transmitters Act. The law updates standards for the licensing, supervision and regulation of money transmitters while codifying an agent-to-payee exemption. Colorado joins a list of numerous states to adopt MTMA legislation, seeking to standardize money transmission rules across state governments.
Overview of the Nationwide MTMA Efforts
The Model Money Transmission Modernization Act (MTMA) was developed by the Conference of State Bank Supervisors (CSBS), with input from a working group of regulators and industry participants through the Fintech Industry Advisory Panel. MTMA allows for multistate licensing and multistate supervision, seeking to harmonize and unify the existing patchwork of money transmission state regulation. Additionally, MTMA standardizes:
- Definitions applicable to money transmitters, removing technical differences between states that make compliance difficult for companies operating in multiple states.
- Exemptions from money transmitter licensing to promote consistency among states.
- The licensing process, including standardized determinations of who is in control of a licensee and the vetting process.
- Safety and soundness requirements, including net worth, bonding and permissible investments.
As of May 2025, 27 states have fully or partially adopted MTMA legislation. CSBS aims to have all 50 states fully adopt the MTMA in order for the uniform regulatory framework to work as intended. CSBS, state regulators and industry participants are continuing to push the remaining states to pass the MTMA through their state legislatures.
Overview of Colorado’s MTMA
The law largely reflects the CSBS MTMA by repealing and replacing the former money transmitter law to include updated definitions of regulated activities, including payroll processing and digital money transmission. The law enables Colorado to participate in multistate licensing initiatives and allows for money transmitter supervisors to rely on reports and examinations from other accredited states.
The law importantly codifies the agent-to-payee exemption, exempting certain intermediaries acting on behalf of payees from licensing requirements. Licensees are also required to transfer funds in a timely manner, provide receipts with specific transaction details and offer refunds under certain conditions.
Next Steps
The new law is slated to take effect 90 days following adjournment of the Colorado General Assembly sine die (Aug. 5, 2025), assuming no referendum petition is filed. Money transmitters and other financial services providers operating in Colorado should examine their practices to ensure compliance with the new law.
