United States – Michigan Payments & Fintech Regulation

Licensing, Authorisation & Market Access

Michigan's market-access picture for payments-adjacent crypto businesses is defined this cycle by a gap between stalled state legislation and active municipal regulation of cash-conversion kiosks. House Bill 5544, the Money Transmission Modernization Act, passed the Michigan House 97-10 on June 25, 2026 and has been referred to the Senate Finance, Insurance, and Consumer Protection Committee since July 1, 2026, with no further Senate action recorded through October 25, 2026; under current engrossed text, the existing Money Transmission Services Act would not be repealed, and existing licensees would not face conflicting new provisions, until July 1, 2027.

Into that gap, Jackson, Michigan adopted an ordinance banning cryptocurrency kiosks outright, effective October 22, 2026 with a 90-day removal window for existing machines. Port Huron took a lighter-touch approach, adopting an annual kiosk-operator registration requirement due October 1, 2026. This produces a market-access patchwork at the municipal level: a would-be kiosk operator in Michigan currently faces a different access regime depending on which municipality it operates in, pending the outcome of state-level legislation (HB 5469 and HB 5470) that would bring kiosk operators under uniform money-transmitter licensing and preempt the current municipal approach.

Outlook

The key market-access variable is whether HB 5469/5470 advance out of House committee before further municipal ordinances multiply the patchwork; separately, whether HB 5544 moves in Senate committee will determine the pace of the broader money-transmission modernization and its eventual effect on licensing scope for the fiat leg of crypto conversion.

Conduct, Safeguarding & Financial Promotions

Michigan's non-bank payment-institution and e-money-issuer sector faces a modernizing conduct and licensing framework this cycle, driven by two companion bills moving through the state legislature. House Bill 5544 proposes full adoption of the Conference of State Bank Supervisors' Money Transmission Modernization Act template, including its treatment of payroll processors as licensable money transmitters, while Senate Bill 835 proposes the same core template with a payroll-processor exemption, treating such processors as agents of the payor rather than as entities requiring separate licensure. Both bills form part of a broader 31-state modernization wave coordinated through the CSBS template, under which participating states adopt harmonized net-worth, surety-bond, and permissible-investment standards for licensed money transmitters. This is a High-confidence, directly-sourced legislative development, evidenced by CSBS's own tracked legislative update, though neither bill has been enacted this cycle.

The conduct-and-safeguarding significance of this modernization effort lies less in any single provision than in the broader alignment it represents: Michigan's money-transmission licensing regime would move toward the more contemporary, harmonized standard that a majority of US states have now adopted or are adopting. For non-bank payment institutions and e-money issuers licensed in Michigan, this creates a forward-looking conduct expectation: capital, safeguarding, and permissible-investment standards are likely to converge toward the CSBS template's baseline, even though the precise terms remain unsettled pending enactment.

The payroll-processor question captured in the divergence between the House and Senate bills is itself a conduct-classification issue with direct financial-promotions and product-scope implications: whether a payroll processor is treated as an agent of the payor (exempt, per the Senate version) or as a licensable money transmitter in its own right (per the House version) determines whether that class of non-bank payment intermediary carries the full weight of Michigan's money-transmission conduct obligations, including bonding, net-worth, and associated safeguarding standards for customer funds. This is a bank-versus-non-bank-adjacent distinction in substance, since it determines which category of non-bank intermediary is drawn into the state's licensed-conduct perimeter and which remains outside it.

Outlook

The decisive near-term event for this domain is the legislative fate of House Bill 5544 and Senate Bill 835, expected to remain live through the fourth quarter of 2026; enactment of either bill, and in particular resolution of the payroll-processor exemption question between the House and Senate versions, would settle the conduct-classification question for that category of non-bank payment intermediary and would be the appropriate trigger to revisit this domain's signal level. Passage would also be the clearest evidence yet that Michigan intends to align fully with the 31-state CSBS modernization wave rather than retain its current, less harmonized standard.

Payment Corridor Dynamics

The operative payment-corridor development in Michigan is the City of Jackson's citywide ban on unregulated cryptocurrency kiosks, effective 23 September 2026, reported as the first such municipal-level ban in the state. Kiosks function as a cash-to-crypto on-ramp corridor, and a flat local ban removes that corridor entirely within city limits rather than regulating its terms of operation. The ordinance carries a savings clause suspending it only to the extent any future state law conflicts with it, a drafting choice that makes the ordinance's durability directly contingent on how Michigan's state legislature ultimately resolves the kiosk question. That resolution is itself unsettled: the state Senate has advanced a bill that would prohibit kiosks statewide, while separate House bills would instead create a licensing regime for the same activity. Jackson's ordinance would likely be rendered moot by the Senate's prohibition bill (which would achieve the same outcome statewide) but could survive, or need revision, if the House's licensing approach prevails instead, since a licensing regime would legalize kiosk operation under conditions the municipal ban does not currently contemplate.

For any payment-services provider or kiosk network operator with existing or planned footprint in Michigan, the corridor-level consequence is near-term fragmentation: a jurisdiction-by-jurisdiction patchwork in which some municipalities move ahead of the state with their own prohibitions while the state's own regulatory design remains in flux. This is consistent with a broader pattern in which municipal and local authorities, closer to consumer-facing fraud complaints associated with kiosk misuse, are acting faster than state legislatures working through the ordinary committee process. The corridor risk is not limited to Jackson; any other Michigan municipality could in principle enact a similar ordinance before the state legislature settles its own approach, compounding the patchwork.

Outlook

The durability of Jackson's ban, and the likelihood of further municipal bans elsewhere in Michigan, both turn on which of the two state-level tracks, prohibition or licensing, advances first. A Senate floor vote on the prohibition bill would likely resolve the kiosk corridor question statewide and render local ordinances like Jackson's superfluous, while continued stalling at the state level would leave room for more municipalities to act unilaterally in the interim. Market participants with kiosk operations spanning multiple Michigan municipalities should treat the corridor environment as unsettled until one of the two state tracks reaches final floor action.

Legal & Litigation

The Sixth Circuit Court of Appeals ruled on 25 September 2026 that Kalshi's sports-event contracts do not satisfy the statutory definition of a swap under the Commodity Exchange Act, and that the CEA accordingly does not preempt state gambling law in Ohio and Tennessee. The decision does not directly bind Michigan, which sits outside the Sixth Circuit, but the underlying legal question it resolves, whether CEA coverage of an instrument shields its issuer from state-level gambling or gaming regulation, applies in identical form to any sports-event-contract product offered to customers in Michigan. An operator relying on a federal-preemption theory to resist state gaming-regulator jurisdiction now faces a persuasive adverse ruling from at least one circuit, even though the question remains open as a formal matter in Michigan's own circuit pending any eventual conflict among circuits or Supreme Court resolution.

Kalshi has sought full-court, en banc rehearing of the panel decision, citing recent proposed rulemaking activity at the Commodity Futures Trading Commission as relevant to the preemption question. That rehearing request means the panel ruling is not yet final even within the circuit that issued it, and the practical effect of the ruling, including whether it will be cited by Michigan's own gaming regulator in future enforcement matters, remains to be seen pending that outcome. In the interim, Michigan's gaming regulator has not relied on litigated enforcement against sports-event-contract operators in the state; its leverage has instead come through direct stipulation, discussed separately, which has proven effective regardless of how the federal preemption question is ultimately resolved.

Outlook

The rehearing petition is the development to track going into the next period: an en banc reversal would reopen the preemption question in the Sixth Circuit, while a denial would let the panel ruling stand as persuasive authority available to state gaming regulators, including Michigan's, in any future enforcement posture that relies on a CEA-preemption rebuttal. Either outcome is relevant background for any sports-event-contract operator assessing its litigation risk profile in states, including Michigan, where it continues to offer or has recently exited similar products.

Correspondent Banking, Settlement & Access

Michigan-licensed payment and gaming-sector respondents face a widening federal overlay this cycle that bears directly on correspondent-banking settlement and access decisions, even though no Michigan-specific correspondent-banking instrument moved. Two federal developments define the picture. First, the Corporate Transparency Act's beneficial-ownership-information reporting rule now exempts domestic entities and their beneficial owners from reporting, limiting the mandatory disclosure regime to foreign entities only; this High-confidence finding is corroborated directly by FinCEN's own published guidance. Second, the Financial Crimes Enforcement Network's proposed overhaul of AML/CFT program-effectiveness standards under 31 CFR Part 1021 would require board-level governance approval, a documented risk-assessment methodology, and a US-located responsible officer for BSA-regulated institutions, including casinos; this Assessed-confidence proposal's comment period closed June 9, 2026, with the final rule still pending.

The analytical spine of correspondent-banking analysis is the asymmetry between bank and non-bank access: chartered banks generally carry direct, long-standing correspondent relationships and dedicated compliance infrastructure to satisfy a correspondent's due-diligence requirements, while non-bank payment institutions, e-money issuers, and money-services businesses typically access settlement rails indirectly, through a sponsoring bank or a thinner set of correspondent relationships that are more sensitive to shifts in the underlying compliance backdrop. Both federal developments this cycle widen that asymmetry rather than narrow it. The beneficial-ownership reporting narrowing reduces the ownership-transparency information a correspondent can obtain through federal registries when assessing a Michigan-registered non-bank respondent, shifting more of that verification burden onto the correspondent's own customer due-diligence program. The Part 1021 proposal, while nominally targeted at casinos and card clubs rather than non-bank payment institutions directly, raises the governance bar for an entire category of BSA-regulated institution that shares infrastructure and customer bases with Michigan's licensed payments ecosystem, and a correspondent assessing settlement risk for gaming-adjacent payment flows would reasonably read the proposal as raising the compliance standard its respondent must be able to evidence.

Neither development is Michigan-specific in its drafting, but both reach Michigan directly: Michigan's Detroit commercial casinos and tribal gaming operations are Part 1021-regulated institutions, and Michigan-registered payment and money-services entities are subject to the same federal beneficial-ownership reporting rule as any other US-registered entity. The correspondent-banking read for this cycle is accordingly one of federal-overlay tightening on the governance and transparency dimensions, layered onto a licensing framework that itself remains in a modernization-pending state.

Outlook

The Office of Management and Budget's review of the Corporate Transparency Act final rule, expected in the fourth quarter of 2026, and the FinCEN Part 1021 rule's anticipated finalization in the first quarter of 2027, are the two events that will determine whether this cycle's tightening trajectory continues, stabilizes, or reverses. A correspondent bank recalibrating its risk appetite for Michigan-licensed payment and gaming-sector respondents should treat both as live inputs; neither has reached a final, settled state this cycle.

Commercial Intelligence & Fintech

Two discrete commercial events define the fintech activity in Michigan, both involving exits from the sports-related event-contract product line under stipulations with the state's gaming regulator. Coinbase Financial Markets, Inc. entered its stipulation on 7 October 2026, and Polymarket US, operating through QCX LLC, entered a corresponding stipulation on 28 October 2026, each agreeing to cease offering sports-related event contracts and sports positions to Michigan customers. Financial terms were not publicly disclosed for either event, consistent with the nature of a regulatory stipulation rather than an arms-length commercial transaction, and no valuation, settlement amount, or other monetary figure attaches to either filing as of this reporting.

Both events represent market-exit commercial actions rather than new product launches or funding activity, and both involve the same underlying regulatory counterparty and the same product category, suggesting a consistent enforcement approach by Michigan's gaming regulator toward sports-adjacent contract products across different operator types, a traditional licensed exchange operator in Coinbase's case and a prediction-market-native operator in Polymarket's case. The sequencing, three weeks apart, indicates the regulator continued to press the same product-category issue against multiple operators in succession rather than resolving it with a single enforcement action.

Outlook

Whether additional operators in the sports-related event-contract space follow the same exit path from Michigan will depend on continued application of the same stipulation-based enforcement approach by the state's gaming regulator. Market participants tracking Michigan-specific product risk in this category should treat the regulator's willingness to secure exits via stipulation, across both exchange-style and prediction-market-style operators, as an established pattern for this reporting period, independent of how the separate Sixth Circuit litigation over CEA preemption is ultimately resolved.