I said to seek legal counsel. However it is also easy for the OP to say they "can apply regulation X" and then provide no supporting evidence in any form and back it up with an utterly implausible story. Trolling is easy.
I don't find it implausible
per se, I'd just take anything I was told over the phone with a grain of salt because what you really want is a written statement quoting the specific regulations they maintain require you to be registered/licensed. Once you have that, you know whether there are exemptions you can seek or whether you can mount a valid argument that those regulations shouldn't be applied to your particular circumstances. More importantly, even though such communication isn't generally viewed as binding advice, it's difficult to get into trouble if you've followed it and it turns out to be wrong.
In my experience, regulators want a
lot of information before they'll offer you an opinion because so much is determined by individual circumstances. The opinion they give you is based entirely on the information you give them and it can be totally wrong if there's something you didn't mention because you thought it was unimportant or if the person you spoke to didn't ask the right questions.
This kind of shit might seem unimportant but it's stuff you need to consider if you don't want to find you conventional financial accounts suddenly shut down for suspicious activity. Every time a business opens an account with a financial institution (including merchant accounts with CC providers) that institution does an AML risk assessment and if they don't like your level of risk or if your account activity indicates a higher level of risk than they first anticipated, they'll either dump you as a customer or start imposing increasingly onerous KYC requirements on you (and likely start filing a whole lot of SARs).
