Effective July 2024, Vermont rehauled its money transmission law, joining the other states (approximately half) that have enacted some or all of the Money Transmission Modernization Act (MTMA). In doing so, Vermont furthers a trend of states expanding their regulators' purview over the virtual currency industry.
Vermont is notable because the state's new law is particularly sweeping.
Not only has Vermont incorporated virtual currency into its current money transmission regime, but it has also created virtual currency-specific provisions, most notably aimed at "virtual-currency kiosk" and all other "virtual-currency business activity."
Virtual Currency Business Activity
All people engaged in virtual currency business activity (including kiosk operators) require money transmission licenses, unless various exemptions apply. Virtual currency business activity includes exchanging, storing, administering, buying or selling virtual currency as a consumer business, and receiving virtual currency or control of virtual currency for transmission or transmitting virtual currency.
The concept of "control" of virtual currency refers to "the power to execute unilaterally or prevent indefinitely a virtual currency transaction." The control of private keys, for example, may now prove dispositive in analyzing whether an entity engages money transmission.
All virtual currency businesses must comply with strict requirements around recordkeeping and consumer disclosures. Those controlling or storing virtual currency must also hold such currency in identical type and amount.
Virtual Currency Kiosks
Licensees must register all of their cryptocurrency ATMs and obtain approval prior to operation. Such kiosks must also display various consumer disclosures, including information about the business, fees, and receipts. Kiosk operators also must comply with various other requirements like transaction limits, fee caps, and are not allowed to operate in the state prior to July 2025 (unless already operational before this new law was enacted).
Conclusion
In addition to requiring virtual currency businesses to comply with traditional money transmission rules, states like Vermont are continually adding specific requirements for virtual currency businesses. Our team is closely monitoring these growing trends.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.