Connecticut Virtual Currency Money Transmission Regime

The Connecticut regime is organized as a money transmission licensing framework rather than a standalone crypto statute. Current law defines money transmission broadly to include engaging in the business of issuing payment instruments or stored value, receiving money or monetary value for transmission, transmitting monetary value, and related activity involving a virtual currency kiosk or digital wallet. The statutory definition also refers to digital wallets used with consumer payment mobile applications. Virtual currency is defined as digital units used as a medium of exchange or form of digitally stored value and excludes certain closed-loop, affinity, rewards, online-game and publisher-issued units.

The Department of Banking’s virtual currency FAQ states that a license may be required where an exchange holds either party’s virtual currency or fiat currency, transmits virtual or fiat currency on behalf of others, or advertises money transmission services. The same FAQ states that, after Oct. 1, 2024, virtual currency ATMs and kiosks are required to be licensed under Public Act 24-146. This makes the Connecticut profile most relevant to custodial virtual currency services, exchange operators, consumer payment wallet providers and kiosk operators with Connecticut activity.

License applications are processed through the designated licensing system and must include specified applicant, control-person, financial and business information. For applicants whose proposed activity includes transmitting monetary value in virtual currency, the statute requires a statement describing that activity. Connecticut also requires surety bonding for licensed money transmitters. For virtual currency transmission, the commissioner determines the bond amount and may calculate it to address present and prospective volatility in the virtual currency market.

The regime contains asset and custody provisions aimed at customer claims. A licensee engaged in virtual currency money transmission must hold virtual currency of the same type and amount owed or obligated to another person. Current law also treats qualifying investments and virtual currency held under the statute as claimant property interests held in trust and protected from attachment. PA 25-66 added restrictions on selling, transferring, assigning, lending, hypothecating, pledging, using or encumbering customer virtual currency except at the customer’s direction, and limits use of third-party custody or control vendors unless the vendor is licensed, a qualifying federally insured depository institution, or approved by the Banking Commissioner.

Connecticut requires virtual currency money transmission licensees to provide material risk disclosures before the initial virtual currency transaction. Required topics include irreversibility, potential non-recoverability of fraudulent or mistaken transactions, lack of government backing or deposit insurance, possible delays in ledger recording, volatility and fraud risk. When opening an account for a new customer, licensees must also disclose liability, stop-payment rights, account-information sharing and material policy changes.

After each virtual currency transaction, licensees must provide a receipt containing transaction and contact details, including fees, exchange rate, refund policy and Department of Banking contact information. Kiosk operators face additional operating rules, including a cap on combined fees and commissions, daily limits for new and existing customers, a fraud-related refund right for certain new-customer transactions, government identification checks, blockchain analytics screening, live customer support and targeted telephone procedures for customers over 60 or for large transactions.

The Connecticut virtual currency money transmission regime should be classified as effective. Its current status reflects a layered statutory framework rather than a single enactment date: virtual currency provisions became effective Oct. 1, 2015; kiosk licensing coverage took effect Oct. 1, 2024; and PA 25-66 amendments took effect Oct. 1, 2025. PA 25-66 also prohibits Connecticut and its political subdivisions from accepting or requiring payment in virtual currency, or purchasing, holding, investing in, or establishing a virtual currency reserve. No future statutory milestone was identified in the reviewed official sources.