Definition ∞ A Money Service Business (MSB) is a non-bank financial institution that provides services such as money transfers, check cashing, currency exchange, or the issuance of money orders. These businesses are subject to specific regulatory oversight, particularly concerning anti-money laundering (AML) and counter-terrorist financing (CTF) requirements. In the context of digital assets, many cryptocurrency exchanges and wallet providers are classified as MSBs. This classification imposes strict compliance obligations on their operations.
Context ∞ The classification of various digital asset service providers as Money Service Businesses has significantly shaped the regulatory landscape for cryptocurrencies. Debates frequently address the scope of this designation and its application to decentralized protocols or self-custodial wallet providers. Compliance costs and the complexity of adhering to MSB regulations pose challenges for smaller crypto businesses. Future regulatory guidance will continue to refine the definition and obligations for virtual asset service providers under this classification.
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