State of Connecticut Department of Banking

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Virtual Currency Money Transmission FAQs


1. What is virtual currency?

Virtual currency is, in pertinent part, “any type of digital unit that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology”.  See C.G.S. Section 36a-596(18).  Virtual currency can be referred to by other terms including, but not limited to “cryptocurrency”, “digital currency” and bitcoin.

2. Is it regulated by Connecticut?

Yes, depending on the activities that are being engaged in, Connecticut General Statutes treats virtual currency similarly to fiat currency (a.k.a. cash) under Connecticut’s money transmission scheme.

3. What is a virtual currency wallet?

A virtual currency wallet is a unique electronic wallet that stores virtual currency.  The wallet is owned by a specific person.  A wallet can be hot, which means that the virtual currency is available on the network to be bought, sold, used as currency for purchases or otherwise transferred and transmitted.  The wallet can also be cold, which means it is essentially offline and cannot be used until it is moved to a hot wallet.

4. Are virtual currency ATMs required to be licensed in CT?

Whether or not a license is required to operate a virtual currency ATM depends on the types of transactions that the ATM can execute.  The Department has taken the position that licensure is not required if certain factors are present.  First, the ATM must not be connected to any financial institution.  See C.G.S. Section 36a-155.  Second, the ATM must offer transactions limited to buying and/or selling virtual currency in a simultaneous transaction in exchange for fiat currency.  If any other transactions are available, the ATM may be required to be licensed as a money transmitter and a company seeking to engage in such activities is advised to contact the Department for a determination of whether licensure is required prior to commencing activities.  Please review the opinions linked here for more information.

  • 11/1/2018 - A company that establishes and operates stationary kiosks in this state for the purpose of exchanging fiat money for bitcoin and vice versa that operate as vending machines would not be engaged in the business of money transmission pursuant to Section 36a-597(a) and would not be required to obtain a money transmission license.
  • 2/1/2019 - Bitcoin ATMs, which are stationary, unattended devices within the definition of "automated teller machine", but that do not involve a bank or financial institution, and essentially act as vending machines, limited to depositing cash into the bitcoin ATM and receiving bitcoin from the machine's inventory in return, not utilizing an exchange or other payment system, do not require licensure under the Money Transmission Act.
  • 5/15/2019 #2 - Company offering the purchase and sale of virtual currency through its kiosk-based and Internet-based services, where there is a direct and immediate exchange of currency with the inventory of the company kiosk and there is no bank, financial institution or payment system involved in any part of the transaction, is not required to obtain licensure under the Money Transmission Act and the kiosk does not constitute an ATM.
  • 12/19/2019 - Company that operates virtual currency kiosks, which are stationary, unattended devices within the definition of "automated teller machine", but that do not involve a bank or financial institution, and essentially act as vending machines, limited to depositing cash into the kiosks and immediately receiving virtual currency from the kiosks' inventory in return, not utilizing an exchange or other payment system, does not require licensure under the Money Transmission Act.

5. What is a virtual currency exchange?

A virtual currency exchange is a business that allows customers to trade virtual currency for other assets, such as conventional fiat money or other virtual currency.

6. Do virtual currency exchanges need to be licensed in Connecticut?

Depending on the activities in which the exchange is engaged, the exchange may be required to maintain a money transmission license.  For example, an exchange that simply matches a buyer and seller of virtual currency through its software platform would not need to be licensed.  However, if said exchange holds either party’s currency (virtual or fiat), transmits virtual or fiat currency on behalf of other persons or advertises money transmission services, licensure would be required.  Please review the opinions linked here for more information.

  • 1/15/2019 - Digital currency exchanges which hold or transmit fiat or virtual currency on behalf of Connecticut residents are engaging in money transmission in this state and require licensure under the Money Transmission Act.
  • 2/21/2019 - Digital currency exchanges which hold or transmit fiat or virtual currency on behalf of Connecticut residents are engaging in money transmission in this state and require licensure under the Money Transmission Act.  The exemptions from licensure under Section 36a-609 do not extend to those entities subject to additional regulation and oversight by virtue of registration as a broker-dealer with the Department and SEC and membership in FINRA.
  • 2/22/2019 #1 - New York trust company offering custodial and exchange related services, including holding cash and bitcoin as agent and facilitating the trading of virtual currency and fiat currency on behalf of Connecticut residents, is engaging in money transmission in this state and requires licensure under the Money Transmission Act even if it does not have a physical presence in this state.  Connecticut does not recognize an exemption from licensure for trust companies.
  • 2/22/2019 #2 - Company offering custody and related transaction services for institutional clients, which holds or transmits virtual currency on behalf of Connecticut residents, is engaging in money transmission in this state and requires licensure under the Money Transmission Act.  The exemptions from licensure under Section 36a-609 do not extend to those entities subject to additional regulation and oversight by virtue of registration as a broker-dealer with the Department and SEC and membership in FINRA.