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On June 30, 2025, Connecticut Governor Ned Lamont signed Public Act No. 25-66, enacting broad revisions to Connecticut's money transmission statutes. The new law, effective October 1, 2025, updates definitions, expands consumer protections for virtual currency users, and imposes new restrictions on the state's ability to use digital assets.
The act touches nearly every aspect of the state's money transmission framework. It expands the types of activities subject to licensure, increases obligations for virtual currency custody and consumer disclosures, restricts government use of digital assets, and imposes new safeguards for minors using money-sharing applications. These changes reflect Connecticut's continued effort to modernize its oversight of digital financial services.
Key provisions of the Act include:
- Expansion of covered activities to digital wallets and mobile apps. The revised definition of "money transmission" now captures transfers of virtual currency through digital wallets and other app-based services, even when no kiosk is involved.
- One-to-one reserve and custody requirement for virtual currency. Licensees must hold the same type and amount of virtual currency as owed to customers and treat those assets as trust property shielded from creditor claims.
- Universal disclosure and receipt obligations for virtual-currency transactions. Detailed pre-transaction risk warnings and post-transaction receipts—formerly required only of kiosk operators—now apply to every licensee handling virtual currency.
- Restriction on unapproved third-party custodians. Licensees may delegate custody of customer virtual currency only to entities that are licensed, federally insured, or expressly approved by the Banking Commissioner.
- Prohibition on state acceptance or investment of virtual currency. The state and its political subdivisions may neither accept virtual currency as payment nor invest public funds in digital assets.
- Parental verification and data-deletion rights for minors' money-sharing apps. Before opening an account for a minor, licensees must obtain parental attestation and ID, and must delete the account and supply transaction data upon a verified request.
Putting It Into Practice: Add Connecticut to the growing list of jurisdictions modernizing their money-transmission rules to address digital-asset activity and licensing requirements (previously discussed here). Financial services providers, including wallet operators, custodians, and app-based money transmitters, should closely monitor developments in other states and evaluate whether updates to their licensing strategies or compliance programs are needed to stay ahead of evolving regulatory obligations.
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