Key takeaways
- Section 10.01 of the Money Transmission Modernization Act requires tangible net worth, at all times, of the greater of $100,000 or 3% of the first $100 million of total assets, 2% of the next $900 million and 0.5% above $1 billion.
- Tangible net worth is aggregate assets excluding all intangible assets, less liabilities, determined under US generally accepted accounting principles.
- CSBS guidance treats most virtual currency as intangible, but fiat-backed stablecoins with an unconditional right to redeem at par are tangible.
- Right-of-use lease assets are not deducted where the leased asset is tangible, under CSBS guidance approved on March 17, 2026.
- The requirement is measured on total assets, so customer funds carried on the balance sheet raise the requirement while intangible assets reduce the resource.
What are the key facts on MTMA tangible net worth?
Tangible net worth is the capital buffer a money transmitter must hold from its own resources, separate from the assets it holds for customers.
| Item | Position |
|---|---|
| Rule | MTMA section 10.01, enacted state by state (for example M.G.L. c.169B s.9(a), NRS 671.115, Ark. Code 23-55-207) |
| Regulators | State financial regulators; interpretive guidance from the CSBS NonDepository Supervisory Committee |
| Applies to | Licensed money transmitters in states that have adopted the MTMA |
| Timing | At all times; shown at application from the most recent financial statements |
| Last checked | October 11, 2026, against state statutes, the CSBS enactment list and NMLS |
What is tangible net worth?
Tangible net worth is total assets minus intangible assets minus liabilities, measured under US GAAP.
The MTMA model text defines it as the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined under US generally accepted accounting principles. In practice the starting point is the equity shown in the licensee's own financial statements. Goodwill, acquired customer relationships, licenses and other intangible assets recognized under GAAP are then deducted. The result shows how much loss the firm could absorb from tangible resources before customers were exposed.
Tangible net worth sits alongside the other two MTMA prudential tests: the surety bond and permissible investments. The bond protects customers in one state; permissible investments cover all outstanding obligations; tangible net worth is the firm's own capital. A licensee can pass one test and fail another, so each needs its own daily view. Our guide to the Money Transmission Modernization Act covers all three.
How is the requirement calculated?
The requirement is the greater of $100,000 or a percentage of total assets that falls as the firm grows.
Massachusetts General Laws c.169B, section 9(a), which follows the model, requires tangible net worth of the greater of $100,000 or 3% of total assets for the first $100 million, 2% of additional assets from $100 million to $1 billion, and 0.5% of additional assets over $1 billion. Nevada (NRS 671.115) and Arkansas (Ark. Code 23-55-207) use the same tiers.
| Total assets | Calculation | Tangible net worth required |
|---|---|---|
| $2 million | 3% is $60,000, below the floor | $100,000 |
| $10 million | 3% x $10m | $300,000 |
| $50 million | 3% x $50m | $1,500,000 |
| $250 million | $3m + 2% x $150m | $6,000,000 |
| $1 billion | $3m + 2% x $900m | $21,000,000 |
| $2.5 billion | $21m + 0.5% x $1.5bn | $28,500,000 |
The base is total assets under GAAP. Where customer funds are recorded on the licensee's balance sheet, they increase total assets and therefore the requirement, even though matching liabilities mean they add nothing to net worth.
When must the requirement be met?
At all times, not only at quarter end or at license renewal.
Under the model, an applicant shows its tangible net worth from its most recent audited or unaudited financial statements, and the regulator may exempt an applicant or licensee in whole or in part for good cause. Massachusetts requires audited or reviewed statements at application. After licensing, the quarterly financial condition report in Section I of the NMLS MSB Call Report gives regulators the figures to test it, and an examination can ask for the position on any date.
Which assets count as intangible?
GAAP intangible assets are deducted, and CSBS has issued three pieces of guidance on the difficult cases.
| Asset | CSBS position | Guidance |
|---|---|---|
| Virtual currency held by the licensee | Intangible and deducted, except to the extent it matches an unencumbered customer obligation in the same virtual currency arising in the ordinary course of business. Included in total assets for the requirement | June 2025 |
| Fiat-backed stablecoins, including GENIUS Act payment stablecoins | Tangible financial assets, if a contract gives the holder a legally enforceable, unconditional right to redeem from the issuer for cash at par | March 2026 |
| Stablecoins not backed by fiat | Unlikely to be tangible; deducted | March 2026 |
| Right-of-use lease asset, tangible underlying asset | Not deducted; the lease liability is still a liability | March 2026 |
| Right-of-use lease asset, intangible underlying asset | Deducted | March 2026 |
The virtual currency guidance gives an example: $2.5 million of bitcoin held against $2.5 million of bitcoin owed to customers is not deducted, while the remaining $22.5 million of bitcoin is. It also states that virtual currency is, in general, not a sufficient source of capital. Our guide to the virtual currency like-kind requirement covers the related holding rule.
Do all MTMA states use the same figures?
The tiers are widely shared, but states change bond amounts and some wording, so each state's text should be checked.
- Georgia applies the same $100,000 floor and 3%, 2% and 0.5% tiers in O.C.G.A. 7-1-683.2(a), but sets a $250,000 surety bond for money transmitters.
- Indiana sets the surety bond at the greater of $300,000 or average daily money transmission liability, capped at $500,000 (Ind. Code 28-8-4.1-1002).
- Nebraska's section 8-2730 uses the term net worth rather than tangible net worth, with the same tiers.
- The model contains a bracketed option letting a state reduce the bond to $100,000 where tangible net worth exceeds 10% of total assets, so strong capital can lower the bond in states that adopted it.
See average daily money transmission liability for how the bond is sized.
How does tangible net worth relate to the other MTMA tests?
It is one of three separate tests, and a licensee can pass one while failing another.
| Test | What it protects | Measured against | Where it is reported |
|---|---|---|---|
| Tangible net worth | Loss-absorbing capital of the firm itself | Total assets of the licensee | Section I of the MSB Call Report (financial condition) |
| Surety bond | Customers in one state | Average daily money transmission liability in that state | Bond on file with each state |
| Permissible investments | All customers if the firm fails | All outstanding money transmission obligations | Section III of the MSB Call Report |
The three tests interact. Customer funds recorded on the balance sheet are permissible investments for Section III, but they also raise total assets and therefore the tangible net worth requirement. Assets that do not count as permissible investments, such as goodwill or unmatched virtual currency, may still support GAAP equity but are removed again for tangible net worth. A firm that funds growth by acquisition can therefore see equity rise while tangible net worth falls.
How does growth change the requirement?
The requirement rises with every dollar of total assets until $1 billion, at 2% between $100 million and $1 billion.
A licensee with $400 million of total assets needs $9.0 million. If a new enterprise customer adds $150 million of balances carried on the balance sheet, total assets reach $550 million and the requirement rises to $12.0 million, an increase of $3.0 million with no change in the firm's own capital. Treasury and finance teams should therefore model the requirement before onboarding large customers or changing how customer funds are held, not after the quarter closes. Monthly forecasting of total assets, intangible balances and retained earnings gives the board time to raise capital before a breach, rather than reporting one.
Losses work the same way in reverse. Because the test applies at all times, a large operating loss in the middle of a quarter can cause a breach before any financial statements are prepared. Licensees with thin headroom often set an internal trigger, for example 120% of the requirement, at which management must act.
What does a tangible net worth calculation look like?
The example below shows a licensee with healthy GAAP equity that still falls short once intangibles are removed.
| Line | Amount ($m) |
|---|---|
| Total assets under GAAP, including $520.0m of customer funds on balance sheet | 640.0 |
| Total liabilities, including $520.0m owed to customers | (575.0) |
| GAAP equity | 65.0 |
| Less goodwill | (35.0) |
| Less acquired customer relationships | (12.0) |
| Less bitcoin not matched to bitcoin owed to customers ($10.0m held, $4.0m matched) | (6.0) |
| Fiat-backed stablecoin redeemable at par ($6.0m) and office lease right-of-use asset ($3.0m) | Not deducted |
| Tangible net worth | 12.0 |
| Requirement: $3.0m + 2% x ($640.0m - $100.0m) | 13.8 |
| Shortfall | (1.8) |
The licensee has $65.0 million of equity but only $12.0 million of tangible net worth against a $13.8 million requirement. Its options are new capital, fewer intangible assets, or a smaller balance sheet: if $100.0 million of customer funds moved off balance sheet under an arrangement its auditors accepted, the requirement would fall by $2.0 million to $11.8 million.
What should a licensee check?
These checks keep the tangible net worth test current between reporting dates.
- Identify the net worth section and wording in every MTMA state where the firm holds a license.
- Recalculate the requirement whenever total assets move materially, not only at quarter end.
- List every intangible asset, including those arising from acquisitions, and deduct it.
- Separate virtual currency matched to same-currency customer obligations from unmatched holdings.
- Document the redemption terms that make any stablecoin holding tangible.
- Treat right-of-use assets according to the underlying leased asset.
- Agree the figures to the financial condition data in Section I of the MSB Call Report.
How does Safeheld help?
Safeheld reconciles bank, custody and ledger records for each entity and currency every day, so customer funds, virtual currency holdings and the obligations behind them are confirmed before the capital calculation.
The same records feed the prepared report pack for the MSB Call Report permissible investments section. See daily reconciliation.
Frequently asked questions
What is the MTMA net worth requirement?
Tangible net worth at all times of the greater of $100,000 or 3% of the first $100 million of total assets, plus 2% of total assets from $100 million to $1 billion and 0.5% above $1 billion.
How is tangible net worth defined?
Aggregate assets excluding all intangible assets, less liabilities, determined under US generally accepted accounting principles.
Does virtual currency count toward tangible net worth?
CSBS guidance from June 2025 treats virtual currency as intangible and deducts it, except to the extent it matches an unencumbered customer obligation in the same virtual currency.
Are stablecoins tangible assets for the MTMA?
Fiat-backed stablecoins, including GENIUS Act payment stablecoins, are tangible if the holder has a legally enforceable, unconditional right to redeem from the issuer for cash at par, under CSBS guidance from March 2026.
Are lease right-of-use assets deducted?
Not where the leased asset is tangible, such as an office or equipment. They are deducted where the underlying asset is intangible.
Can a regulator waive the net worth requirement?
Yes. The model lets the regulator exempt an applicant or licensee in whole or in part for good cause.
Do customer funds on the balance sheet affect the requirement?
Yes. The requirement is a percentage of total assets under GAAP, so customer funds recorded on the balance sheet increase it, even though the matching liability means they add nothing to net worth.
References
- CSBS, Money Transmission Modernization Act model text (PDF)
- CSBS, MTMA interpretive guidance: tangible net worth and virtual currency (June 2025)
- CSBS, MTMA interpretive guidance: stablecoin tangibility (March 2026, PDF)
- CSBS, MTMA interpretive guidance: right-of-use leases (March 2026, PDF)
- Massachusetts General Laws c.169B, section 9
- CSBS, MTMA state enactments (October 8, 2026, PDF)
About Safeheld
Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. For US money transmitters it reconciles customer funds, digital asset holdings and obligations by entity and currency every day, giving finance teams confirmed inputs for capital and permissible investment tests. To discuss your money transmission operations, contact us at safeheld.com/contact.
This article is general information on US money transmission rules and is not legal or regulatory advice.