United States — Michigan (US-MI)

Licensing, Authorisation & Market Access

Michigan regulates money transmission under the Money Transmission Services Act (2006 PA 250, MCL 487.1001-487.1047), administered by the Department of Insurance and Financial Services (DIFS) through the Nationwide Multistate Licensing System. Licensees are non-bank payment institutions and e-money-style money transmitters distinct from bank-chartered payment providers, and must maintain net worth of $100,000 to $1,500,000 alongside a surety bond starting at $500,000 for the first location, scaling by $10,000 per additional location or authorized delegate up to a $1,500,000 cap. Section 4 of the Act provides an "agent of payee" exemption, available only on formal application to the DIFS Director, and the Act does not apply to currency-exchange-only activity.

This established regime is now under legislative challenge. The Money Transmission Modernization Act (HB 5544, HB 5798 and SB 0835, 2025-2026 session) would repeal 2006 PA 250 in favor of the industry-standard multistate MTMA licensing model; SB 0835 was referred to the Senate Finance, Insurance and Consumer Protection Committee on 2026-03-17 and, as of March 2026, had not been enacted.

Outlook

The bill's committee status leaves both its timing and ultimate enactment uncertain; no scheduled vote date has been identified. Its passage would be the most significant change to Michigan's non-bank licensing architecture since 2006, and its interaction with the safeguarding upgrade proposed in the same package (see W1b) makes the two modules' trajectories inseparable.

Conduct, Safeguarding & Financial Promotions

Michigan's current safeguarding model for non-bank money transmitters rests on a permissible-investments requirement — including ACH and credit-card receivables under DIFS Order No. 2018-003-CF, effective 2018-02-12 — backed by the mandatory surety bond rather than a statutory trust. DIFS holds confidentiality and examination powers over licensee information under MTSA Section 26, giving the Director authority to examine and investigate licensees' books and conduct.

The pending Money Transmission Modernization Act would introduce a statutory trust over permissible investments for the benefit of purchasers and holders of outstanding money-transmission obligations, protected from creditor attachment or levy in insolvency, bankruptcy or receivership — a materially stronger safeguarding standard than the current surety-bond-only approach, though not yet in force.

Outlook

If enacted, the statutory-trust mechanism would bring Michigan's non-bank safeguarding standard closer to segregation-based models used elsewhere, shifting risk allocation in a licensee failure away from general creditors and toward protecting customer claims directly. Until enactment, the surety bond remains the sole safeguarding backstop for Michigan MTSA licensees.

Stablecoins & Digital Money

Michigan has no dedicated state-level stablecoin statute; the operative framework for both bank and non-bank issuers serving Michigan is the federal GENIUS Act, signed into law on 2025-07-18, which establishes a federal framework for payment-stablecoin issuance, operation and regulation applying nationwide. Three implementing rulemakings are proceeding in parallel through 2026. The OCC has proposed a rule governing stablecoin issuance and custody activities of national banks, federal savings associations, federal branches, and federal- or state-qualified payment stablecoin issuers, with comments due 2026-05-01 — a track that directly shapes the issuer pathway available to Michigan state-chartered banks. The FDIC proposed, on 2025-12-19, application requirements and procedures for FDIC-supervised institutions, including Michigan state nonmember banks, to issue payment stablecoins through a subsidiary. And FinCEN and OFAC jointly proposed a rule, with comments due 2026-06-09, treating permitted payment stablecoin issuers as Bank Secrecy Act financial institutions subject to AML and sanctions-compliance obligations.

Outlook

With both the OCC and FinCEN/OFAC comment periods now closed, final rule text and effective dates are the next milestones to watch; these will determine the practical issuance pathway — and compliance burden — for any Michigan-chartered bank or qualified issuer seeking to enter stablecoin issuance ahead of, or absent, any Michigan-specific statute.

Operational Resilience & Critical Infrastructure

Michigan's operational-resilience layer combines general and sector-specific instruments. The Identity Theft Protection Act (MCL 445.72) requires notice to affected Michigan residents without unreasonable delay upon discovery of a security breach, unless substantial harm is unlikely, with a safe harbor for institutions compliant with federal interagency guidance. DIFS separately requires licensees to notify it within 10 business days of determining a cybersecurity event occurred (Form FIS 2359), under the Michigan Insurance Data Security Law (PA 690 of 2018), alongside an annual compliance-certification filing (Form FIS 2360) due February 15.

A five-bill reform package, Senate Bills 360-364, would tighten this standard considerably: a firm 45-day breach-notification deadline, civil fines of up to $2,000, and alignment with NIST CSF 2.0. The package passed the Senate 19-15 on 2025-08-26 and remained pending in the House Committee on Government Operations as of March 2026.

Outlook

Enactment of SB 360-364 would convert Michigan's current "without unreasonable delay" standard into a hard deadline with attached financial penalties, raising both the compliance bar and the enforcement exposure for payments firms operating in the state; its progress through the House is the item to track.

Scheme & Network Compliance

Michigan merchants have been permitted to surcharge credit-card transactions since a 2013 Visa/Mastercard/bank class-action settlement lifted the contractual surcharging ban; debit-card surcharging remains prohibited under card-network rules and federal law. The Michigan Department of Treasury has determined that credit-card surcharges form part of the taxable "gross proceeds" or "sales price" under the General Sales Tax Act, subjecting them to the state's 6% sales tax.

Outlook

The sales-tax treatment of surcharges adds a distinct compliance layer for Michigan merchants beyond card-network disclosure rules, and is a state-specific wrinkle on an otherwise federally-settled surcharging landscape.

Payment Corridor Dynamics

Michigan State University Federal Credit Union (MSUFCU) participates in the FedNow Service on a receive-only basis, with planned send-side capability, citing gig-worker and student demand for instant access to funds. This sits within a national FedNow expansion in which the service reached more than 1,500 participating financial institutions across all 50 states by late 2025 — a 44% year-on-year increase — with the per-transaction limit raised from $1 million to $10 million effective November 2025. No Michigan-specific corridor infrastructure beyond this national-rail participation was identified this cycle.

Outlook

MSUFCU's stated intent to add send-side capability, and its exploration of further FedNow use cases (see W9), positions it as a bellwether for credit-union-led instant-payments adoption in Michigan rather than evidence of state-specific corridor build-out.

Industry Structure & Commercial Dynamics

Michigan's payments-adjacent banking structure was reshaped in the review period by Fifth Third Bancorp's $12.7 billion all-stock acquisition of Comerica Incorporated, closed in February 2026. The combination creates the ninth-largest US bank by assets (approximately $288 billion) and makes Fifth Third the largest bank by Michigan and Detroit retail deposit share, with 227 combined Michigan branches remaining after 75 closures. Separately, MSUFCU partnered with fintech Zirtue, integrated with Plaid, to offer a friends-and-family lending platform. Detroit's broader fintech ecosystem includes Autobooks (embedded SMB banking, which raised a $50 million Series C in 2022 plus $40 million in further growth funding), InvestNext, and Y Combinator-backed digital-banking provider Bankjoy.

Outlook

The Fifth Third-Comerica combination is the dominant structural fact shaping Michigan's payments-adjacent banking landscape and will condition deposit concentration, branch access and settlement scale for the state for years to come; the smaller credit-union-fintech partnership activity (MSUFCU-Zirtue) and the Detroit embedded-fintech cluster represent the complementary, lower-scale layer of market development.

Legal & Litigation

Michigan is at the center of the national prediction-markets legal battle. Attorney General Dana Nessel sued Kalshi in Ingham County Circuit Court on 2026-03-03, alleging unlicensed sports-related event contracts — including a Pistons-Wizards combined-point-total market — and seeking a permanent injunction. On 2026-06-17, U.S. District Judge Paul Maloney denied preliminary-injunction motions brought by Polymarket and Robinhood, finding sports-event contracts unlikely to qualify as Commodity Exchange Act "swaps" and holding that Michigan retains traditional gambling-regulation authority, citing Bond v. United States.

Outlook

The ruling leaves Michigan's state enforcement track intact in the near term, but the underlying federal preemption questions raised by Polymarket, Robinhood and related litigants remain unresolved; further appellate activity is the item to watch, and the outcome will have implications well beyond Michigan for the state-versus-federal division of authority over event-contract markets.

Merchant Acquiring & Risk

Michigan does not operate a distinct merchant-acquiring license regime; fintechs and merchants instead access card networks, wires and ACH through the standard U.S. sponsor-bank model. The state's principal acquiring-adjacent obligations are consumer-facing surcharge rules: signage and disclosure requirements at the store entrance and point-of-sale terminal, and online disclosure at first mention of a credit-card payment option, with surcharges capped at processing cost and prohibited from varying by card brand.

Outlook

Michigan's acquiring-risk framework remains thin relative to a dedicated licensing regime, with surcharge disclosure compliance the primary state-specific obligation layered on top of the national sponsor-bank access model.

Product Innovation & Market Development

The City of Detroit launched a $700,000 Startup Fund distributing seed grants of $15,000 and scale grants of $50,000 to Detroit-area startups, including fintechs; a second round in February 2026 awarded $300,000 across 13 startups. Separately, MSUFCU is exploring additional FedNow use cases beyond its current receive-only participation, including indirect auto-loan funding, student-loan refund disbursement, and insurance-payout disbursement.

Outlook

Both threads point to Michigan's product-innovation layer being anchored in public seed capital and credit-union-led instant-payments experimentation rather than a distinct state regulatory sandbox; MSUFCU's use-case expansion is the item most likely to generate further FedNow-linked product activity in the next cycle.

Consumer Protection & APP Fraud

The Michigan Attorney General's Consumer Protection Team maintains active alerts warning consumers about peer-to-peer payment-app scams, including "return the money" patterns exploiting stolen funds, directing victims to the app host, the FTC, or the CFPB. In April 2026, during Money Smart Week, Attorney General Dana Nessel reissued an AI Scams consumer alert warning of AI-generated deepfake voice-cloning fraud that impersonates loved ones to solicit payment-app transfers.

Outlook

Michigan has no dedicated state APP-fraud reimbursement mandate; consumer redress for payment-app fraud continues to depend on federal complaint channels (FTC, CFPB) and informal AG-level alerting rather than a statutory liability-shifting regime, leaving a policy gap relative to reimbursement models developed elsewhere.

AML/CFT & Financial Crime

This module is sourced from the Sentinel.gi feed; no Michigan-specific Sentinel.gi content was retrievable via open-web search this cycle. What can be carried is the standing statutory backdrop: Michigan MTSA licensees must maintain a documented AML/BSA compliance program as a continuing condition of licensure, alongside quarterly MSB Call Reports, and both the current MTSA and the pending MTMA incorporate the federal Bank Secrecy Act (Public Law 91-508) and its implementing regulations by reference into state licensing conditions. No original illicit-finance analysis has been performed here; readers seeking substantive AML/CFT intelligence should consult the Sentinel.gi feed directly.

Outlook

Sentinel-fed W11 coverage for Michigan is thin relative to Anglosphere and EU jurisdictions in this feed; this is a known under-indexing pattern rather than a signal that Michigan-specific illicit-finance activity is absent.

Correspondent Banking, Settlement & Access

No Michigan-specific correspondent-banking de-risking event was identified this cycle. At the national level, large international correspondent banks continue de-risking relationships with smaller U.S. banks over AML/CDD compliance costs and liability concerns, with the OCC cautioning against category-wide de-risking absent individual risk assessment. The Fifth Third-Comerica combination gives the merged entity increased scale and settlement-system access as the ninth-largest US bank by assets (approximately $288 billion), which may partially mitigate national de-risking pressure on the Michigan-anchored deposit franchise.

Outlook

Michigan institutions remain subject to the same national correspondent-banking dynamics as the rest of the U.S. banking system; the Fifth Third-Comerica scale gain is the one Michigan-specific mitigating factor identified, with no distinct state-level settlement-access initiative in evidence.

Commercial Intelligence

The trailing twelve months produced a cluster of Michigan-linked commercial events. Fifth Third Bancorp's acquisition of Comerica Incorporated, valued at $10.9-12.7 billion all-stock, was announced 2025-10-06 and closed in February 2026. Acrisure LLC acquired Heartland Payroll Solutions from Global Payments Inc. for $1.1 billion, announced 2025-05-28 and closed 2025-10-01. Rocket Companies closed its $14.2 billion acquisition of Mr. Cooper Group on 2025-10-01, creating a combined mortgage-servicing portfolio of nearly 10 million homeowners, and separately integrated its earlier Redfin acquisition — a deal for which the amount was not publicly disclosed — generating a reported $140 million in cost savings within six months per CEO commentary on Q4 2025 earnings, with employee buyouts offered in March 2026 amid the Redfin/Mr. Cooper integration. Supreme Lending announced its acquisition of Port Huron-based Michigan Mutual around late May 2025; the deal value was not publicly disclosed. On the investment side, Benzinga Ventures invested in Detroit fintech startup Unlock Technologies at seed stage during 2025; the amount was not publicly disclosed.

Outlook

The concentration of large, completed M&A around Fifth Third-Comerica and Rocket's mortgage-servicing consolidation marks the highest level of Michigan-linked payments-adjacent deal activity captured this cycle; further integration milestones (Rocket's Redfin/Mr. Cooper buyout program) and any update on the undisclosed-value Supreme Lending-Michigan Mutual and Benzinga-Unlock transactions are the items to track next cycle.