The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Appropriations
BILL: CS/SB 486
INTRODUCER: Appropriations Committee (Recommended by Appropriations Subcommittee on
Agriculture, Environment, and General Government); and Senator Brodeur
SUBJECT: Money Services Businesses
DATE: February 11, 2022 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Arnold Knudson BI Favorable
2. Sanders Betta AEG Recommend: Fav/CS
3. Sanders Sadberry AP Fav/CS
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Technical Changes
I. Summary:
CS/SB 486 amends the Money Services Businesses statutes related to virtual currency. The bill:
 Defines virtual currency as a medium of exchange in electronic or digital format that is not
currency;
 Subjects money transmitters to licensing requirements when transacting business involving a
virtual currency; and
 Prohibits payment instrument sellers from transacting business involving virtual currency.
The bill makes additional revisions to definitions and conforming changes.
The bill has an indeterminate impact to state funds or expenditures. (See section V. Fiscal
Impact below.)
The bill takes effect January 1, 2023.
BILL: CS/SB 486 Page 2
II. Present Situation:
Regulation of Money Transmitters and Payment Instrument Sellers
State Regulation
The Office of Financial Regulation (OFR) regulates banks, credit unions, other financial
institutions, finance companies, and the securities industry.1 The Division of Consumer Finance
within the OFR licenses and regulates various aspects of the non-depository financial services
industries, including money services businesses (MSBs) regulated under ch. 560, F.S. Money
transmitters and payment instrument sellers are two types of MSBs, and both are regulated under
part II of ch. 560, F.S.
A money transmitter receives currency,2 monetary value,3 or payment instruments4 for the
purpose of transmitting the same by any means, including transmission by wire, facsimile,
electronic transfer, courier, the Internet, or through bill payment services or other businesses that
facilitate such transfer within this country, or to or from this country.5 A payment instrument
seller sells, issues, provides, or delivers a payment instrument.6 State and federally chartered
depository institutions, such as banks and credit unions, are exempt from licensure as an MSB.7
Currently, virtual currency is not expressly within ch. 560, F.S., though in the last seven years the
OFR has received over 70 petitions for declaratory statement relating to whether and how virtual
currency is regulated under that chapter. 8
An applicant for a MSB license under ch. 560, F.S., must file an application with the OFR and
pay an application fee of $375.9 The license must be renewed every two years by paying a
renewal fee of $750.10 Money transmitters and payment instrument sellers may operate through
authorized vendors by providing the OFR with specified information about the authorized vendor
and by paying a fee of $38 per authorized vendor location at the time of application and
1
Section 20.121(3)(a)2., F.S.
2
The term “currency” means the coin and paper money of the United States or of any other country which is designated as
legal tender and which circulates and is customarily used and accepted as a medium of exchange in the country of issuance.
Currency includes United States silver certificates, United States notes, and Federal Reserve notes. Currency also includes
official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign country.
Section 560.103(11), F.S.
3
The term “monetary value” means a medium of exchange, whether or not redeemable in currency.
Section 560.103(21), F.S.
4
The term “payment instrument” means a check, draft, warrant, money order, travelers check, electronic instrument, or other
instrument, payment of money, or monetary value whether or not negotiable. The term does not include an instrument that is
redeemable by the issuer in merchandise or service, a credit card voucher, or a letter of credit. Section 560.103(29), F.S.
5
Section 560.103(23), F.S.
6
Section 560.103(30) and (34), F.S.; definition of “payment instrument,” supra note 4.
7
Section 560.104, F.S.
8
See Florida House, HB 1351 (2021) Bill Analysis,
https://www.myfloridahouse.gov/Sections/Documents/loaddoc.aspx?FileName=h1351.IBS.DOCX&DocumentType=Analysi
s&BillNumber=1351&Session=2021 (last visited Jan. 10, 2021), and Florida House, Meeting of the Subcommittee on
Insurance and Banking (Feb. 3, 2021) (statement of Russell Weigel, Commissioner, Florida Office of Financial Regulation).
Declaratory statements can be found by accessing Florida Division of Administrative Hearings at
https://www.doah.state.fl.us/FLAIO//.
9
Sections 560.141 and 560.143, F.S.
10
Id.; s. 560.142, F.S.
BILL: CS/SB 486 Page 3
renewal.11 A money transmitter or payment instrument seller may also engage in the activities
authorized for check cashers12 and foreign currency exchangers13 without paying additional
licensing fees.14
A money transmitter or payment instrument seller must at all times:
 Have a net worth of at least $100,000 and an additional net worth of $10,000 per location in
this state, up to a maximum of $2 million.15
 Have a corporate surety bond in an amount between $50,000 and $2 million depending on
the financial condition, number of locations, and anticipated volume of the licensee.16 In lieu
of a corporate surety bond, the licensee may deposit collateral such as cash or interest-
bearing stocks and bonds with a federally insured financial institution.17
 Possess permissible investments, such as cash and certificates of deposit, with an aggregate
market value of at least the aggregate face amount of all outstanding money transmissions
and payment instruments issued or sold by the licensee or an authorized vendor in the United
States.18 The OFR may waive the permissible investments requirement if the dollar value of a
licensee’s outstanding payment instruments and money transmitted do not exceed the bond or
collateral deposit.19
While MSBs are generally subject to federal anti-money laundering laws,20 Florida law contains
many of the same anti-money laundering reporting requirements and recordkeeping requirements
with the added benefit of state enforcement. An MSB applicant must have an anti-money
laundering program that meets the requirements of federal law.21
Pursuant to the Florida Control of Money Laundering in Money Services Business Act, an MSB
must maintain certain records of each transaction involving currency or payment instruments in
order to deter the use of a money services business to conceal proceeds from criminal activity
and to ensure the availability of such records for criminal, tax, or regulatory investigations or
proceedings.22 An MSB must keep records of each transaction occurring in this state that it
knows to involve currency or other payment instruments having a greater value than $10,000; to
involve the proceeds of specified unlawful activity; or to be designed to evade the reporting
requirements of ch. 896, F.S., or the Florida Control of Money Laundering in Money Services
Business Act.23 The OFR may take administrative action against an MSB for failure to maintain
11
Id.; ss. 560.203, 560.205, and 560.208, F.S.
12
The term “check casher” means a person who sells currency in exchange for payment instruments received, except
travelers checks. Section 560.103(6), F.S.
13
The term “foreign currency exchanger” means a person who exchanges, for compensation, currency of the United States or
a foreign government to currency of another government. Section 560.103(17), F.S.
14
Section 560.204(2), F.S.
15
Section 560.209, F.S.
16
Id.
17
Id.
18
Section 560.210, F.S.
19
Id.
20
31 C.F.R. pt. 1022.
21
Section 560.1401, F.S.
22
Section 560.123, F.S.
23
Id.
BILL: CS/SB 486 Page 4
or produce documents required by ch. 560, F.S., or federal anti-money laundering laws.24 The
OFR may also take administrative action against an MSB for other violations of federal anti-
money laundering laws such as failure to file suspicious activity reports.25
A money transmitter or payment instrument seller must maintain specified records for at least
five years, including the following:26
 A daily record of payment instruments sold and money transmitted;
 A general ledger containing all asset, liability, capital, income, and expense accounts, which
must be posted at least monthly;
 Daily settlement records received from authorized vendors;
 Monthly financial institution statements and reconciliation records;
 Records of outstanding payment instruments and money transmitted;
 Records of each payment instrument paid and money transmission delivered;
 A list of the names and addresses of the licensee’s authorized vendors;
 Records that document the establishment, monitoring, and termination of relationships with
authorized vendors and foreign affiliates; and
 Any additional records, as prescribed by rule, designed to detect and prevent money
laundering.
Recent Case Law: State v. Espinoza
Through an online directory of buyers and sellers of bitcoin, a detective with the Miami Beach
Police Department arranged to meet a person with the username Michelhack, which turned out to
be the defendant Michell Espinoza (defendant), in order to purchase bitcoin.27 The detective
arranged multiple transactions with the defendant as follows:
 During the course of the first transaction, the detective made clear his desire to remain
anonymous and implied that he was involved in illicit activity.28 The detective paid
Mr. Espinoza $500 in cash and received a portion of a bitcoin valued at $416.12, thus earning
Mr. Espinoza a profit of $83.67.29
 The detective arranged a second transaction with Mr. Espinoza during which he told
Mr. Espinoza that he needed the bitcoins to pay for stolen credit card numbers, since he was
in the business of buying and selling stolen credit card numbers from Russian sellers.30 The
detective paid Mr. Espinoza $1,000 in cash and received one bitcoin, thus earning
Mr. Espinoza a profit of approximately $167.56.31
 The detective then arranged a third transaction with Mr. Espinoza.32 The detective inquired
how fast the transaction could be completed because his “Russian buddies” would not send
24
Section 560.114, F.S.
25
Id.
26
Sections 560.1105 and 560.211, F.S.
27
State v. Espinoza, 264 So. 3d 1055, 1059-60 (Fla. 3d DCA 2019).
28
Id. at 1060.
29
Id.
30
Id.
31
Id.
32
Id.
BILL: CS/SB 486 Page 5
him his “[stuff] until they get the coin.”33 The detective deposited $500 into Mr. Espinoza’s
bank account, and Mr. Espinoza transferred 0.54347826 bitcoins to the detective.34
 In the fourth and final transaction, the detective negotiated the transfer of bitcoins worth
$30,000 and represented to Mr. Espinoza that it was to pay for a new batch of stolen credit
card numbers acquired from a recent data breach.35 Although Mr. Espinoza questioned the
authenticity of the $30,000 roll of money that the detective gave him, he otherwise remained
ready and willing to consummate the entire transaction.36 Mr. Espinoza was then taken into
custody.37
Mr. Espinoza was charged with: one count of unlawfully engaging in the business of a money
transmitter and acting as a payment instrument seller as a result of not being licensed to conduct
such activity (count one); and two counts of money laundering (counts two and three).38
Mr. Espinoza filed a motion to dismiss as to all counts, which the trial court granted for the
following reasons:
 As to count one, the trial court found that neither bitcoin nor Mr. Espinoza’s conduct fell
within the ambit of ch. 560, F.S., requiring registration as a money services business.39
Regarding Mr. Espinoza’s conduct, the trial court reasoned that a “money transmitter” would
necessarily operate like a middleman in a financial transaction, much like how Western
Union accepts money from person A, and at the direction of person A, transmits it to person
or entity B.40 Mr. Espinoza was not acting as a middleman; rather the transactions with the
detective were two-party transactions in which Mr. Espinoza sold his own bitcoin to the
detective and received U.S. Dollars in return; and
 As to counts two and three, the trial court found that the conduct at issue qualifies as a
“financial transaction” under the money laundering statutes but that Mr. Espinoza lacked the
requisite intent to be guilty of money laundering.41
The state then appealed the trial court’s dismissal of the information.42 On appeal, the Third
District Court of Appeal (court) held that:
 The trial court erred in dismissing count one because Mr. Espinoza acted as both a money
transmitter and a payment instrument seller and, as such, was required to be licensed as a
money services business;43 and
 The trial court erred in dismissing counts two and three on the basis that Mr. Espinoza lacked
the requisite intent to be guilty of money laundering.44
33
Id.
34
Id.
35
Id. at 1060-61.
36
Id. at 1061.
37
Id.
38
Id. at 1057 and 1061.
39
Id. at 1057 and 1061.
40
Id. at 1065.
41
Id. at 1057 and 1061.
42
Id. at 1061.
43
Id. at 1057 and 1061-62.
44
Id.
BILL: CS/SB 486 Page 6
In the reasoning as to count one, the court determined that bitcoin is both “monetary value” and a
“payment instrument” under ch. 560, F.S.45 This interpretation illustrates the need to expressly
provide whether and how virtual currency falls within ch. 560, F.S. The court’s interpretation
also illustrates the need to clarify the definition of “payment instrument.” “Monetary value” is
akin to “currency” within ch. 560, F.S. Conceptually, a payment instrument is an instrument
denominated in currency (or monetary value), but currency and monetary value should not in and
of themselves be a payment instrument.
Another important aspect of the Espinoza case is that in determining that Mr. Espinoza acted as a
money transmitter, the court addressed whether the definition of “money transmitter” covers
only third-party intermediaries, in which case Mr. Espinoza selling his own bitcoins to the
detective would not have run afoul of the prohibition on unlicensed money transmission.46 On
this point, the court held that “[t]he statute’s plain language clearly contains no third party
transmission requirement in order for an individual’s conduct to fall under the ‘money
transmitter’ definition. As such, we decline to add any third party or ‘middleman’ requirement to
the money transmitter definition found in section 560.103(23).”47 The court’s holding illustrates
the need to clarify the definition of “money transmitter” such that a money transmitter license is
only required for a person acting as an intermediary between two parties, but neither person in a
two-party transaction is required to be licensed.48
Virtual Currency
Virtual currency is a digital representation of value that functions as a medium of exchange, a
unit of account, and/or a store of value.49 In some environments, it operates like “real” currency50
(i.e., the coin and paper money of the United States or of any other country that is designated as
legal tender, circulates, and is customarily used and accepted as a medium of exchange in the
country of issuance), but it does not have legal tender status in any jurisdiction.51 Virtual
currency that has an e