Public Act Summary, PA 25-66
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O F F I C E O F L E G I S L A T I V E R E S E A R C H
P U B L I C A C T S U M M A R Y
PA 25-66—sHB 7082
Banking Committee
AN ACT CONCERNING VARIOUS REVISIONS TO THE MONEY
TRANSMISSION STATUTES, STATE PAYMENTS AND INVESTMENTS
IN VIRTUAL CURRENCY AND MINORS' MONEY SHARING
APPLICATION ACCOUNTS
SUMMARY: This act regulates virtual currency in various ways, including
prohibiting Connecticut and its political subdivisions from accepting or requiring
payment in the form of virtual currency, or purchasing, holding, investing in, or
establishing a virtual currency reserve (§ 5).
The act also makes several virtual currency-related and other changes to the
state’s Money Transmission Act, which regulates businesses, other than banks or
credit unions, that receive and transmit money. Many of these changes affect (1)
people who are or must be licensed as money transmitters under that Act
(“licensees”) and (2) licensees that engage in the business of money transmission
in Connecticut by receiving, transmitting, storing, or maintaining custody or control
of virtual currency (collectively referred to as “virtual currency transmitters” below
for the purposes of this public act summary).
Generally, the act:
1. extends to virtual currency transmitters several existing disclosure and
receipt requirements that apply to virtual currency kiosk owners and
operators (§§ 1 & 4);
2. regulates minors’ access to certain money sharing applications by imposing
restrictions and duties on licensees around opening and closing minors’
accounts in ways that involve parents and legal guardians (§ 7);
3. prohibits licensees who control other people’s virtual currency from,
generally, selling or transferring it without the person’s authorization, or
using others to store or hold custody of it unless they are qualified to do so
(§§ 1, 3 & 4);
4. specifies that virtual currency held by a licensee is a property interest of any
claimants against it on a proportional basis (§ 2); and
5. makes minor changes to the definitions and advertising restrictions in the
Money Transmission Act (§§ 1 & 6).
Lastly, the act makes technical and conforming changes.
EFFECTIVE DATE: October 1, 2025
§ 1 — MONEY TRANSMISSION ACT SCOPE
Under existing law, “money transmission” includes, among other things,
engaging in the business of issuing or selling payment instruments or stored value.
The act specifies that this includes direct engagement or engagement through an
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“authorized delegate” (i.e. someone a licensee designates to provide money
transmission services on the licensee’s behalf). It also relatedly changes the “stored
value” definition, which was monetary value evidenced by an “electronic record”
(i.e. information stored in an electronic medium and retrievable in perceivable
form). The act renames the record as “electronic or digital record” and specifies
that “stored value” is monetary value that represents a claim against the issuer of
the monetary value.
Additionally, the act specifies that the methods of “money transmission”
include using a digital wallet, such as in connection with a consumer payment
mobile application. Under the act, a “digital wallet” is any electronic or digital
functionality that (1) stores stored value or virtual currency for a consumer,
including in encrypted or tokenized form, and (2) transmits, routes, or otherwise
processes the stored value or virtual currency to facilitate a consumer payment
transaction.
§§ 1-5 — VIRTUAL CURRENCY DEFINITION
By law and under the act, “virtual currency” is a digital unit (1) used as a
medium of exchange or form of digitally stored value or (2) incorporated into
payment system technology. It includes digital units of exchange that have a
centralized repository or administrator, are decentralized without a centralized
repository or administrator, or may be created or obtained by computing or
manufacturing effort. Virtual currency does not include digital units used:
1. solely in online gaming platforms with no other market or application or
2. exclusively in a consumer affinity or rewards program that (a) can be used
only as payment for purchases with the issuer or another designated
merchant and (b) cannot be converted into, or redeemed for, fiat currency.
§§ 1, 3 & 4 — VIRTUAL CURRENCY CUSTODY AND CONTROL
RESTRICTIONS
The act imposes two restrictions on virtual currency transmitters handling
virtual currency. First, it prohibits them from selling, transferring, assigning,
lending, hypothecating, pledging, or otherwise using or encumbering virtual
currency stored, held, controlled, maintained by, or under the custody or control of
the licensee on a person’s behalf, except for the sale, transfer of ownership, or
assignment at the person’s direction.
Second, it limits existing law’s provisions allowing virtual currency
transmitters to use authorized delegates to provide money transmission services on
their behalf. Regardless of those authorizations, the act prohibits these transmitters
from directly or indirectly using or engaging any other person, including a virtual
currency control services vendor, to store or hold virtual currency for or on behalf
of a customer, unless the other person is a licensed money transmitter, a qualified
bank or credit union, or approved by the banking commissioner to do so.
Under the act, a “virtual currency control services vendor” is a person who
controls virtual currency under an agreement with another person who assumes
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control of this currency on a third person’s behalf.
§§ 1 & 4 — VIRTUAL CURRENCY TRANSACTION DISCLOSURES AND
RECEIPTS
The act extends many existing disclosure requirements to cover virtual currency
transmitters. Specifically, it extends those that had only applied to virtual currency
kiosk owners and operators when establishing a relationship with a customer before
entering into an initial virtual currency transaction.
The act also extends to virtual currency transmitters most of the existing
disclosure requirements (1) when opening an account for a new customer before
entering into an initial virtual currency transaction (e.g., on customer’s liability for
unauthorized transactions, customer’s right to stop payment, and information
disclosed to third parties) and (2) before each virtual currency transaction (e.g.,
transaction amount, fees and charges, and warning that the transaction may not be
undone).
As under existing law for virtual currency kiosk owners and operators, the act
requires virtual currency transmitters to ensure that each customer acknowledges
receipt of all applicable disclosures. The act also extends to virtual currency
transmitters the existing receipt requirements that apply once a virtual currency
transaction is completed.
§ 2 — PROPERTY INTERESTS OF CLAIMANTS AGAINST LICENSEES
Under existing law, licensees that engage in the business of money transmission
in Connecticut by receiving, transmitting, storing, or maintaining custody or control
of virtual currency on behalf of another person must at all times hold virtual
currency of the same type and amount owed or obligated to the other person. The
act specifies that this virtual currency is a property interest of any claimants against
the licensee on a proportional basis and in the type and amount to which the
claimants are entitled, without regard to when the claimants became entitled or the
licensee obtained control.
§ 6 — MONEY TRANSMISSION ACT ADVERTISING RESTRICTIONS
The act adds a restriction on advertising by money transmission licensees. It
specifically prohibits them from including any statement or claim in their
solicitations or advertisements that funds deposited with them are eligible for
Federal Deposit Insurance Corporation (FDIC) protections. Existing law already
prohibits licensees from including any statement or claim that is deceptive, false,
or misleading. (The FDIC generally only supervises and insures certain banks and
savings associations, which are exempt from the Money Transmission Act.)
However, the act allows solicitations and advertisements by licensed money
transmitters to include a statement or claim that funds deposited with them are
eligible for FDIC protections if the (1) funds are placed in a deposit account at an
FDIC-insured depository institution in a way that qualifies the fund for deposit
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insurance coverage under applicable federal law and (2) statement or claim clearly
identifies the institution, accurately describes the extent and conditions of the
coverage, and does not suggest or imply that the transmitter or any nondeposit
product, virtual currency, or digital asset is FDIC-insured.
§ 7 — MINORS’ ACCESS TO MONEY SHARING APPLICATIONS
Generally, the act prohibits any licensee, beginning on October 1, 2025, from
allowing anyone to sponsor, open, or establish a money sharing application account
for a minor unless the licensee (1) receives an attestation from the person stating
that he or she is the minor’s parent or legal guardian and (2) either receives a copy
of the person’s driver’s license or other valid government-issued identification or
verifies the person’s identity according to the federal Bank Secrecy Act and its
regulations. The act also requires, with exceptions, licensees to delete a minor’s
money sharing application account within 30 business days after receiving a request
to do so from the minor or the minor’s parent or legal guardian.
Under the act, a “money sharing application” is an Internet-based service or
application that is (1) owned or operated by a licensee, (2) used by a consumer in
Connecticut, and (3) primarily intended to allow users to send and receive money.
Under the act, a “minor” is a consumer younger than age 18, and a “consumer” is
a state resident and generally excludes anyone acting in a commercial or
employment context.
General Procedures and Exceptions
When responding to requests to delete a minor’s account, the act generally
requires licensees to stop processing the minor’s personal data within the 30-
business-day response period after receiving the request.
By law and under the act, “personal data” is any information that is linked, or
reasonably linkable, to an identified or identifiable individual, excluding de-
identified data or publicly available information. “De-identified data” is generally
data that cannot reasonably be used to infer information about, or otherwise be
linked to, a specific individual or his or her device, and “publicly available
information” is generally information that is lawfully available through federal,
state, or municipal government records, or widely distributed media (CGS § 42-
515). (PA 25-113, § 5, specifies that “publicly available information” does not
include certain biometric data.)
Under the act, licensees do not have to follow these account deletion and
personal data processing requirements if other applicable law, such as
Connecticut’s laws on consumer data privacy and online monitoring, allow or
require them to preserve a minor’s account or personal data.
Additionally, the act allows licensees to extend the time to delete an account
and stop processing personal data by an additional 30 business days if (1) it is
reasonably necessary to do so based on the complexity and number of, presumably,
additional requests from the requestor, and (2) the licensee informs the requestor
about the extension and reason for it within the initial 30-business-day response
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period.
As part of deletion requests, the act allows requestors to also ask licensees for
all data associated with the minor’s account. Under the act, this must at least include
an itemization of each account transaction and the identity of who opened the
account. Licensees must provide the data within the deletion timeframe above.
Relatedly, the act requires licensees to (1) establish one or more secure and
reliable ways for minors and their parents and legal guardians to submit requests to
delete minors’ accounts and (2) describe them in a notice given to consumers who
have a money sharing application account with the licensee. Licensees that provide
a mechanism to initiate a process to delete an account are deemed to be in
compliance with this provision.
Inability to Authenticate Requests
In addition to the exceptions above, the act allows licensees to ignore requests
they cannot authenticate if they notify the requestor that they cannot authenticate
the request and will not be able to do so until the requestor provides additional
reasonably necessary information. Under the act, to “authenticate” is to use
reasonable means and make a commercially reasonable effort to determine if the
requestor is the minor for the account or the minor’s parent or legal guardian.
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