HB 5211 — AN ACT CONCERNING VIRTUAL CURRENCY AND MONEY TRANSMISSION.

[(23)]24-146 (24)6 "Virtual currency kiosk" means an electronic terminal acting as a mechanical agent of the18 ownerSubstitute orHouse operatorBill toNo. enable the owner or operator to facilitate the exchange of virtual currency for fiat currency or other virtual currency, including, but not limited to, by (A) connecting directly to a separate virtual currency exchanger that performs the actual virtual currency transmission, or (B) drawing upon the virtual currency in the possession of the owner or operator of the electronic terminal.

[(24)]5211 (25)is "Virtualassociated currencywith wallet" means a software application or other mechanism providing a means for holding, storing and transferring virtual currency.currency wallet.

[(23)] (26) "Virtual currency kiosk" means an electronic terminal acting as a mechanical agent of the owner or operator to enable the owner or operator to facilitate the exchange of virtual currency for fiat currency or other virtual currency, including, but not limited to, by (A) connecting directly to a separate virtual currency exchanger that performs the actual virtual currency transmission, or (B) drawing upon the virtual currency in the possession of the owner or operator of the electronic terminal.

[(24)] (27) "Virtual currency wallet" means a software application or other mechanism providing a means for holding, storing and transferring virtual currency.

(a) No person shall engage in the business of money transmission in this state, or advertise or solicit such services, without a main office license issued by the commissioner as provided in sections 36a-595 to 36a-612, inclusive, except as an authorized delegate of a person that has sHB5211been /issued Filea No.license by the commissioner and in accordance with section 36a-607.

178 6 sHB5211 File No.

178 been issued a license by the commissioner and in accordance with section 36a-607.

(1) Has a place of business located in this state, (2) receives money or monetary value in this state or from a personPublic locatedAct inNo. this state, (3) transmits money or monetary value from a locationinthisstate or to apersonlocatedinthisstate, (4)issuesstored value or payment instruments that are sold in this state, [or] (5) sells stored value or payment instruments in this state, or (6) owns, operates, solicits, markets, advertises or facilitates virtual currency kiosks physically located in this state.

24-146 7 of 18 Substitute House Bill No.

5211 person located in this state, (3) transmits money or monetary value from a locationinthisstate or to apersonlocatedinthisstate, (4)issuesstored value or payment instruments that are sold in this state, [or] (5) sells stored value or payment instruments in this state, or (6) owns, operates, solicits, markets, advertises or facilitates virtual currency kiosks physically located in this state.

(b) Not later than fifteen days after the date a licensee ceases to engage in the business of money transmission in this state for any sHB5211reason, /including Filea No.business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall request surrender of the license in accordance with subsection (c) of section 36a-51 for each location where such licensee has ceased to engage in such business.

178The 7licensee sHB5211shall Filealso identify, in writing, to the commissioner the location where the records of the licensee will be stored and the name, address and telephone number of anindividual authorizedto provideaccessto therecords.The surrender of a license does not reduce or eliminate the licensee's civil or criminal Public Act No.

17824-146 reason,8 including a business decision to terminate operations in this state, license revocation, bankruptcy or voluntary dissolution, such licensee shall request surrender of the18 licenseSubstitute inHouse accordanceBill withNo. subsection (c) of section 36a-51 for each location where such licensee has ceased to engage in such business.

The5211 licensee shall also identify, in writing, to the commissioner the location where the records of the licensee will be stored and the name, address and telephone number of anindividual authorizedto provideaccessto therecords.The surrender of a license does not reduce or eliminate the licensee's civil or criminal liability arising from acts or omissions occurring prior to the surrender of the license, including any administrative actions undertaken by the commissioner to revoke or suspend a license, assess a civil penalty, order restitution or exercise any other authority provided to the commissioner.

(2) Procedures to ensure thatthat, noafter consumerwinding ordown purchaseroperations, funds are retained by the licensee aftershall windingnot downretain operationsany andconsumer nofunds, otherpurchaser client funds areor retainedother inclient anyfunds; form by the licensee;

sHB5211(3) /A Fileplan No.demonstrating that consumers shall have access to consumer funds in the licensee's custody;

178(4) 8Detailed sHB5211instructions Fileinforming No.consumers how they may withdraw consumer funds upon request;

178and (3)(5) AAny planother illustratingrecords consumerand accessinformation torequested anyby consumer funds in the custodyPublic ofAct theNo. licensee;

(4)24-146 A9 detailed instruction on withdrawal of consumer18 fundsSubstitute uponHouse requestBill byNo. consumers;

and5211 (5) Any other records and information requested by the commissioner regarding the winding down of operations.

(1) The commissionerlicensee hasprovides received written notice to the commissioner of the proposed termination at least thirty days prior to the effective date of such proposed termination;

(2) AllThe licensee notifies, in writing, all consumers, purchasers and users of the licensee are notified, in writing, of the proposed terminationtermination, and the date of such proposed terminationtermination, at least thirty days prior to the date of such proposed termination;

(3) AllThe licensee provides all consumers, purchasers and users of the licensee are provided with detailed final accountings of theirthe accounts;accounts of such consumers, purchasers and users;

(4) AllThe licensee remits all money held in the custody of the licensee on behalf of consumers, purchasers and users is remitted to such consumers, purchasers and users;

and (5) The licensee hasfiles filed a request to surrender such licensee's license and the commissioner hasaccepts accepted such request.

SubsectionsSection (f) to (h), inclusive, of section 36a-613 of the 2024 supplement to the general statutes areis repealed and the following is substituted in lieu thereof (Effective October 1, 2024):

(f)(a) The [Bankingowner Commissioneror mayoperator establishof a schedulevirtual of]currency maximum[fees]feethatanowneroroperatorofavirtualcurrencykioskkiosk mayshall, chargein forestablishing a specificrelationship [services]with servicea iscustomer tenand perprior centto perentering transaction.into an initialvirtualcurrencytransactionfor,onbehalfoforwiththecustomer, disclose in clear, conspicuous and legible writing in the English language all material risks associated with virtual currency generally, including, but not limited to, the following:

sHB5211Public /Act File No.

17824-146 910 sHB5211of File18 Substitute House Bill No.

1785211 (g)(1) ThereA isdisclosure, establishedwhich ashall maximumbe dailyacknowledged transactionby limitthe ofcustomer, twoprovided thousandseparately fivefrom hundredthe dollarsdisclosures forprovided eachpursuant customerto subdivisions (2) to (9), inclusive, of athis virtualsubsection currencyand kiosk.written prominently and in bold type, stating the following:

(h)"WARNING: The owner or operator of a virtual currency kiosk shall, at such owner's or operator's cost and within seventy-two hours after a virtual currency transaction, allow the customer to cancel and receive a full refund for the virtual currency transaction if such virtual currency transaction [:

(1)LOSSESDUETOFRAUDULENTORACCIDENTALTRANSACTIONS Is]MAY isNOT theBE customer'sRECOVERABLE firstAND virtualTRANSACTIONS currencyIN transactionVIRTUAL withCURRENCY suchARE ownerIRREVERSIBLE."; or operator.

[;(2) Virtual currency is not backed or insured by the government and accounts and value balances are not subject to Federal Deposit Insurance Corporation, National Credit Union Administration or Securities Investor Protection Corporation protections;

and(3) (2)Some isvirtual currency transactions shall be deemed to be made when recorded on a virtualpublic currencyledger, walletwhich may not be the date or exchangetime locatedwhen outsidethe ofcustomer initiates the Unitedvirtual States.]currency Sec.transaction;

5.(4) The value of virtual currency may be derived from the continued willingness of market participants to exchange fiat currency for virtual currency, which may result in the permanent and total loss of the value of a particular virtual currency, if the market for that virtual currency disappears;

(NEW)[(5) (EffectiveThere Octoberis 1,no 2024)assurance (a)that Aa licensee,person orwho accepts a virtual currency as payment today will continue to do so in the licensee'sfuture;] authorizeddelegate,[(6)] shallprovideto(5) asenderofmoneyThe areceiptvolatility forand anyunpredictability monetaryof valuethe receivedprice forof transmissionvirtual bycurrency suchrelative licenseeto orfiat delegate.currency may result in a significant loss over a short period of time;

For[(7) aThe transactionnature conductedof invirtual person,currency the receipt may belead providedto electronicallyan ifincreased therisk senderof requestsfraud or agreescyber toattack; receive an electronic receipt.

For(8) aThe transactionnature conductedof electronicallyvirtual orcurrency bymeans phone,that any technological difficulties experienced by the receiptowner or operator may beprevent providedaccess electronically.to Public Act No.

All24-146 electronic11 receiptsof shall18 beSubstitute providedHouse inBill aNo. retainable form.

The5211 receipt shall be in the English language and the language principally used by the licensee or authorizeduse delegateof toa advertise,customer's solicitvirtual orcurrency; negotiate, either orally or in writing.

(b)and] (1)[(9)](6)Anybondmaintainedbytheowneroroperatorforthe Thebenefit receiptof shallthe containcustomers theof followingsuch information,owner asor applicable:operator may not be sufficient to cover all losses incurred by such customers;

(A)and The(7) nameVirtual ofcurrency transactions are irreversible and are used by persons seeking to defraud customers, including, but not limited to, a person impersonating a customer's loved one, threatening jail time, stating that a customer's identity has been stolen, insisting that a customer withdraw money from the sender;customer's bank account and purchase cryptocurrency or alleging a customer's personal computer has been hacked.

(B)(b) The nameowner or operator of a virtual currency kiosk shall, when opening an account for a new customer and prior to entering into an initial virtual currency transaction for, on behalf of or with such customer, disclose in clear, conspicuous and legible writing in the designatedEnglish recipient;language, using not less than twenty-four point sans-serif-type font, all relevant terms and conditions associated with the products, services and activities of the owner or operator and virtual currency generally, including, but not limited to, the following:

(C)(1) The datecustomer's ofliability thefor transaction;unauthorized virtual currency transactions;

(D)(2) The uniquecustomer's transactionright orto identificationstop number;payment of a preauthorized virtual currency transfer and the procedure used to initiate a stop-payment order;

(E)(3) TheUnder namewhat ofcircumstances the licensee;owner or operator will, absent a court or government order, disclose information concerning the customer's account to third parties;

(F)[(4) The uniquecustomer's identifier;right to receive periodic account statements and Public Act No.

sHB521124-146 /12 Fileof 18 Substitute House Bill No.

1785211 10valuations sHB5211from Filethe No.owner or operator;] (4) The requirement that the owner or operator communicate to the customer what customer information may be disclosed to third parties;

178(5) (G) The licensee'scustomer's businessright address;to receive a physical, printed receipt [, trade ticket or other evidence of] for a virtual currency transaction at the time of the transaction;

(H)and The(6) licensee's[The] customerUpon serviceany telephonechange number;in the rules or policies of the owner or operator, the customer's right to [prior notice of a change in the] consent to such changed rules or policies [of the owner or operator] prior to performing any transaction after such change.

(I)TheamountofthetransactionexpressedinUnitedStatescurrency;(c) The owner or operator of a virtual currency kiosk shall, prior to each transaction in virtual currency for, on behalf of or with a customer, disclose to such customer in clear, conspicuous and legible writing in the English language, using not less than twenty-four point sans-serif- type font, the terms and conditions of the virtual currency transaction, including, but not limited to, the following:

(J)(1) AnyThe feeamount chargedof by the licensee to the sender for the transaction;

(K)(2) Any taxfees, collectedexpenses and charges borne by the licenseecustomer, fromincluding, thebut sendernot forlimited theto, transaction;applicable exchange rates;

and(3) (L)The Anytype otherand feesnature chargedof directly or indirectly by the licenseevirtual orcurrency atransaction; third party involved in the transaction.

(2)(4) TheA licensee,warning orthat, theonce licensee'sexecuted, authorized delegate, shall include on the receiptvirtual orcurrency disclosetransaction on the licensee's Internet web site or mobile application the name and telephone number of the Department of Banking and a statement disclosing that the licensee's customers may contactnot thebe departmentundone, withif questionsapplicable; or complaints about the licensee's money transmission services.

(5) A daily virtual currency transaction limit in accordance with subsection (g) of this section;

and (6) The difference in the sale price of the virtual currency versus the current market price.

Public Act No.

24-146 13 of 18 Substitute House Bill No.

5211 (d)The owner or operatorofavirtualcurrency kiosk shallensure that each customer acknowledges receipt of all disclosures required under this section.

(e) (1) The owner or operator of a virtual currency kiosk shall, upon the completion of any virtual currency transaction, provide to the customer a receipt containing the following information:

[(1)] (A) The name of, and contact information for, the owner or operator, including, but not limited to, the owner or operator's business address and a customer service telephone number established by the owner or operator to answer questions and register complaints;

(B) The name of the customer;

[(2)] (C) The type, value, date and precise time of such virtual currency transaction, and each virtual currency address;

(D) The amount of such virtual currency transaction expressed in United States currency;

(E) The full unique transaction hash or identification number;

(F) The public virtual currency address of the customer;

(G) The unique identifier;

[(3) The] (H) Any fee charged, including, but not limited to, any fee charged directly or indirectly by the owner or operator or a third party involved in such virtual currency transaction;

[(4)] (I) The exchange rate, if applicable;

(J) Any tax collected by the owner or operator for such virtual currency transaction;

[(5)] (K) A statement of the liability of the owner or operator for Public Act No.

24-146 14 of 18 Substitute House Bill No.

5211 nondelivery or delayed delivery;

[(6)] (L) A statement of the refund policy of the owner or operator;

[and] (M) The name and telephone number of the Department of Banking and a statement disclosing that the owner or operator's customers may contact the department with questions or complaints about the owner or operator's virtual currency kiosk services;

and [(7)] (N) Any additional information the Banking Commissioner may require.

(2) The receipt required under subdivision (1) of this subsection:

(A) Shall be provided in (i) a retainable form, (ii) the English language, and (iii) the language principally used by the owner or operator of the virtual currency kiosk to advertise, solicit or negotiate, either orally or in writing;

and (B) May be provided electronically if the customer requests or agrees to receive an electronic receipt.

(f) The [Banking Commissioner may establish a schedule of maximum fees that] total amount of any fee and commission charged by an owner or operator of a virtual currency kiosk [may charge for specific services] for a virtual currency transaction shall not exceed fifteen per cent of the amount of the virtual currency transaction.

(g) There [is] are established [a] the following maximum daily virtual currency kiosk transaction [limit of two] limits:

(1) Two thousand [five hundred] dollars for each new customer of a virtual currency kiosk;

and (2) Five thousand dollars for each existing customer of a virtual Public Act No.

24-146 15 of 18 Substitute House Bill No.

5211 currency kiosk.

(h) The owner or operator of a virtual currency kiosk shall [, at such owner's or operator's cost and within seventy-two hours after a virtual currency transaction, allow the] allow a new customer, upon therequest of the new customer, to cancel and receive a full refund for [the] any fraudulent virtual currency [transaction if such virtual currency transaction:

(1) Is the customer's first virtual currency transaction with such owner or operator;

and (2) is to a virtual currency wallet or exchange located outside of the United States.] transactions that occurred not later than seventy-two hours after the new customer registered as a customer of such owner or operator if, not later than thirty days after the last virtual currency transaction that occurred during such seventy-two hour period, the new customer:

(1) Contacts such owner or operator and a government or law enforcement agency to inform such owner or operator and government or law enforcement agency of the fraudulent nature of such virtual currency transaction;

and (2) Files a report with a government or law enforcement agency memorializing the fraudulent nature of such virtual currency transaction.

(i) Each owner or operator of a virtual currency kiosk shall:

(1) Obtain a copy of a government-issued identification card that identifies each customer of such owner or operator;

(2) Maintain restrictions that prevent more than one customer of such owner or operator from using the same virtual currency wallet;

(3) Be able to prevent designated virtual currency wallets from being used at any virtual currency kiosk owned or operated by such owner or operator;

Public Act No.

24-146 16 of 18 Substitute House Bill No.

5211 (4) Use an established third party that specializes in performing blockchain analyses to preemptively perform such analyses to identify and prevent high risk or sanctioned virtual currency wallets from being used by customersat virtualcurrencykiosksownedor operatedby such owner or operator;

(5) Define, in such owner or operator's policies and procedures, a risk-based method of monitoring customers of such owner or operator on a post-transaction basis;

(6) Offer, during the hours of operation of the virtual currency kiosks owned or operated by such owner or operator, live customer support by telephone from a telephone number prominently displayed at or on such virtual currency kiosks;

(7)Identifyandspeak bytelephonewithany newcustomeroversixty years of age prior to such new customer completing such new customer's first virtual currency transaction with such owner or operator.

During such communication, which shall be recorded and retained by such owner or operator, the owner or operator shall (A) reconfirm any attestations made by such new customer at a virtual currency kiosk owned or operated by such owner or operator, (B) discuss the transaction, and (C) discuss types of fraudulent schemes relating to virtual currency.

Such owner or operator's approval of the transaction shall be dependent upon such owner or operator's assessment of such communication;

(8) Identify and speak by telephone with any new customer attempting to perform a virtual currency transaction that exceeds an amount that has been predesignated by such owner or operator as a large transaction amount before such transaction may be completed.

During such communication, which shall be recorded and retained by such owner or operator, the owner or operator shall (A) positively identify such new customer, (B) review such new customer's stated Public Act No.

24-146 17 of 18 Substitute House Bill No.

5211 purpose of the transaction, and (C) discuss types of fraudulent schemes relating to virtual currency.

Such owner or operator's approval of the transaction shall be dependent upon such owner or operator's assessment of such communication;

(9) Designate and employ a chief compliance officer who shall:

(A) Be qualified to coordinate and monitor a compliance program to ensure compliance with this section and all other applicable federal and state laws, rules and regulations;

(B) Be employed on a full-time basis by such owner or operator;

and (C) Not own more than twenty per cent of the virtual currency kiosk owner or operator that employs such officer;

and (10) Use full-time employees to fulfill such owner or operator's compliance responsibilities under federal and state laws, rules and regulations.

6.5.

ThisAs actused in this subsection, "nonfungible tokens" shall takenot effectinclude astokens followsissued andor shallsold amendprimarily thefor followingconsumptive, sections:personal or household purposes.

SectionApproved 1June October6, 1, 2024 36a-596Public Sec.Act No.

224-146 October18 1,of 202418 36a-597(a) October 1, 2024 Sec.

3 36a-599 sHB5211 / File No.

178 11 sHB5211 File No.

178 Sec.

4 October 1, 2024 36a-613(f) to (h) Sec.

5 October 1, 2024 New section Sec.

6 October 1, 2024 36a-614(b) Statement of Legislative Commissioners:

Section 1(5) was divided into Subparas.

and "but" was changed to "[but] and" for clarity;

in Section 3(d), "shall" was added before "provide" for clarity;

in Section 3(e), "terminate its business" was changed to "terminate such licensee's business" for clarity and consistency with standard drafting conventions;

and in Section 3(e)(5), "surrender its license" was changed to "surrender such licensee's license" for clarity and consistency with standard drafting conventions.

BA Joint Favorable Subst.

-LCO sHB5211 / File No.

178 12 sHB5211 File No.

178 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

None Municipal Impact:

None Explanation The makes various changes to the state’s Money Transmission Act and other sections of the banking statutes regarding the regulation of virtual currency, resulting in no fiscal impact because the department can meet the requirements of the bill with existing resources.

The Out Years State Impact:

None Municipal Impact:

None sHB5211 / File No.

178 13 sHB5211 File No.

178 OLR Bill Analysis HB 5211 AN ACT CONCERNING VIRTUAL CURRENCY AND MONEY TRANSMISSION.

SUMMARY PA 23-82 generally (1) authorized the banking commissioner to regulate the business use of digital assets by entities and individuals under his regulatory jurisdiction and (2) created several requirements regulating virtual currency kiosks.

This bill makes various related changes and other revisions to the state’s Money Transmission Act, which regulates businesses, other than banks or credit unions, that receive and transmit money.

Principally, the bill:

1.

explicitly adds nonfungible tokens (a.k.a.

NFTs) to the list of digital asset examples that the banking commissioner may regulate (§ 6);

2.

removes the foreign wallet prerequisite that restricted which first time virtual currency kiosk customers could receive refunds (§ 4(h));

3.

eliminates the banking commissioner’s authority to set a scheduleofmaximum servicefeesforvirtualcurrencykiosksand instead caps all service fees at 10% per transaction (§ 4(f));

4.

requires money transmitters to give senders of money a receipt for funds transmitted and sets the information that must be includedonthereceipt(e.g.,date,sender’sandrecipient’snames, fee, and transmitter’s contact information) (§ 5);

5.

directs money transmitters to have a plan and accounting for sHB5211 / File No.

178 14 sHB5211 File No.

178 winding down operations, which the bill outlines (e.g., recordsof sufficient finances and procedures for disbursing funds) (§ 3(d));

and 6.

prohibits money transmitters from ending their businesses until certain notices and information are provided to the banking commissioner and consumers, funds have been distributed, and the commissioner has accepted the transmitter’s request to surrender its license (§ 3(e)).

The bill also makes technical and conforming changes.

EFFECTIVE DATE:

October 1, 2024 § 1 — MONEY TRANSMISSION ACT DEFINITION CHANGES Permissible Investment By law, “permissible investment” includes, among other things, cash in U.S.

currency.

The bill specifies that this cash includes cash equivalents, demand deposits, savings deposits, and funds in demand deposit and savings deposit accounts held in an insured depository institution for the benefit of the customers of a “licensee” (i.e., any person licensed or required to be licensed as a money transmitter).

Under the bill, cash equivalents include:

1.

automated clearing house items in transit to a licensee or payee;

2.

international wires in transit to a payee;

3.

cash in transit via armored car;

4.

cash in smart safes;

5.

cash in locations owned by licensees;

6.

transmission receivables that are funded by debit cards or credit cards and owed by any bank;

and 7.

money market mutual funds rated “AAA” or the equivalent by S & P Global, Incorporated in the “S & P Global Ratings” or by any other rating service recognized by the banking commissioner.

sHB5211 / File No.

178 15 sHB5211 File No.

178 The Money Transmission Act has several requirements for permissible investments that are affected by the bill’s change.

The affected existing provisions generally require:

1.

money transmission license applicants to include a list of their permissible investments with their applications (CGS § 36a-598), 2.

money transmission licensees to maintain permissible investments having a value at least equal to the aggregate amount of their outstanding money transmissionsin Connecticut (CGS § 36a-603), and 3.

money transmission licensees to file a list of permissible investments with the banking commissioner within 90 days of the end of their fiscal years (CGS § 36a-606).

Receipt The bill adds a definition for “receipt,” which means a paper record, electronicrecord,orother writtenconfirmationofamoney transmission transaction.

It applies this definition to section five of the bill and the existing moneytransmissionlaws.(Indoing so,thebillappearstocreate conflicts with several existing laws that currently use “receipt” with different meanings (see CGS §§ 36a-602, 36a-607, 36a-611 and 36a- 613(d)).) Other Definitions Beyondtheaboveterms,thebillalsoappliesthe MoneyTransmission Act’s other existing definitions to section five of the bill that pertains to money transmission receipts.

§ 2 — LICENSING AND VIRTUAL CURRENCY KIOSKS The bill explicitly requires, on and after October 1, 2024, any person who owns, operates, solicits, markets, advertises, or facilitates virtual currency kiosks physically located in Connecticut to have a money transmission license.

Existing law already prohibits any person from engaging in the business of money transmission, or advertising or soliciting money sHB5211 / File No.

178 16 sHB5211 File No.

178 transmitter services, without the license.

PA 23-82 specified that the use of virtual currency kiosks for engaging in the business of transmitting money or monetary value is a type of “money transmission” under state law, which effectively subjected kiosk owners, operators, and others to the licensing and other existing requirements under the state’s Money Transmission Act.

§ 3 — LICENSEE WIND DOWN PLANNING AND EXECUTION The bill requires each money transmission licensee to maintain a detailed plan and accounting as to how it will engage in winding down operations, which they must give to the banking commissioner upon request.

The plan and accounting must contain:

1.

a record showing that the licensee has enough minimum net worth and reserves to prevent losses to consumers and purchasers and to repay any outstanding obligations or accounts payable, 2.

procedures to ensure that consumer or purchaser funds are not kept by the licensee after winding down operations and other client funds are not kept in any form by the licensee, 3.

a plan illustrating consumer access to any consumer funds in the custody of the licensee, 4.

a detailed instruction on funds withdrawal upon consumers’ requests, and 5.

any other records and information the commissioner requests regarding the winding down of operations.

The bill also prohibits licensees from terminating their businesses unless the following conditions are met:

1.

the commissioner has received written notice of the proposed termination at least 30 days before its effective date;

2.

all consumers, purchasers, and users of the licensee are (a) sHB5211 / File No.

178 17 sHB5211 File No.

178 notified, in writing, of the proposed termination and its date at least 30 days beforehand and (b) given detailed final accountings of their accounts;

3.

all money held in the licensee’s custody on behalf of consumers, purchasers, and users is remitted to them;

and 4.

the licensee has filed a request to surrender its license and the commissioner has accepted the request.

§ 4 — VIRTUAL CURRENCY KIOSK FEES AND REFUNDS Current law allows the banking commissioner to establish a schedule of maximum fees that a virtual currency kiosk owner or operator may chargeforspecificservices.The billeliminatesthisauthorityandinstead sets a statutory cap for the maximum fee that may be charged for a specific service at 10% per transaction.

Current law also requires virtual currency kiosk owners and operators to allow customers to cancel and receive a full refund, at the owner’s or operator’s cost, for a virtual currency transaction within 72 hours afterwards if it is (1) a customer’s first transaction with the owner or operator and (2) to a virtual currency wallet or exchange located outside of the United States.

The bill eliminates the second condition, thereby requiring owners and operators to provide refunds for first transactions, regardless of where the wallet or exchange is located.

§ 5 — MONEY TRANSMISSION RECEIPTS The bill requires money transmission licensees, or their authorized delegates, to give “receipts” (see § 1 above).

Specifically, to senders of money for any monetary value the licensee or delegate receives for transmission.

By law, “monetary value” is a medium of exchange, whether or not redeemable in money.

The bill requires receipts to be in both English and the language principally used by the licensee or authorized delegate to advertise, solicit, or negotiate, either orally or in writing.

Receipts must also have the following information, as applicable:

sHB5211 / File No.

178 18 sHB5211 File No.

178 1.

the sender’s and designated recipient’s names;

2.

the licensee’s name, business address, and customer service telephone number;

3.

the transaction date and amount expressed in U.S.

currency;

4.

the unique transaction or identification number;

5.

the unique identifier;

6.

any fee charged by the licensee to the sender for the transaction;

7.

any tax collected by the licensee from the sender for the transaction;

and 8.

any other fees charged directly or indirectly by the licensee or a third party involved in the transaction.

Under the bill, electronic receipts must be given in a retainable form and may be given in specific circumstances.

Specifically, for a transaction done in person, the receipt may be given electronically if the sender requests or agrees to receive an electronic receipt.

For a transaction done electronically or by phone, the receipt may be given electronically.

Lastly, the bill requires the licensee, or the licensee’s authorized delegate, to include on the receipt, or disclose on the licensee’s website or mobile application, the name and telephone number of the Department of Banking and a statement disclosing that the licensee’s customers may contact the department with questions or complaints about the licensee’s money transmission services.

(PA 23-82 created a requirement that virtual currency kiosk owners and operators give customers a similar but different receipt after a transaction’s completion (see CGS § 36a-613(e)).

It is not clear how that requirement will function in practice with the bill’s receipt requirements, such as if virtual currency kiosk owners and operators can satisfy both in a single receipt or if they must give two separate receipts.) sHB5211 / File No.

178 19 sHB5211 File No.

178 § 6 — DIGITAL ASSET REGULATION Existing law allows the banking commissioner to adopt regulations, forms, and orders governing the business use of digital assets by entities and individuals under his regulatory jurisdiction.

By law, digital assets include virtual currencies and stablecoins.

The bill explicitly adds nonfungible tokens as another example of these digital assets.

Existing law does not define virtual currency or stablecoin for the purposes of regulating digital assets and the bill similarly does not define nonfungible tokens.

(Virtual currency is defined in state statutes for other purposes.

The Federal Reserve has referred to stablecoins as cryptocurrencies that peg their value to a real-world asset, typically the U.S.

dollar.

The U.S.

Government Accountability Office has referred to nonfungible tokens as digital identifiers, similar to a certificate of ownership, that represent a digital or physical asset.) By law, the commissioner’s regulations, forms, and orders must ensure consumer protection and the commissioner may consult with federal and other states’ financial services regulators, other stakeholders, and industry professionals to ensure that digital assets receive, to the extent practicable, consistent treatment.

Under existing law, the commissioner has broad, general authority to adopt regulations within the jurisdiction of his position (CGS § 36a-10).

The banking commissioner administers and enforces laws that apply to, among others, state-chartered banks and credit unions, mortgage lenders and brokers, small loan lenders, consumer collection agencies, money transmission businesses, securities broker-dealers, and investment advisors (CGS Titles 36a & 36b).

COMMITTEE ACTION Banking Committee Joint Favorable Yea 12 Nay 0 (03/12/2024) sHB5211 / File No.

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