Vermont Cryptocurrency Laws

Relevant Statute

Vermont Statutes, Title 8: Banking and Insurance; Chapter 79: Money Services

“Money” Definition

“Money” means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments. 2500

“Money Transmitter” Definition

“Money transmission” means to engage in the business of selling or issuing payment instruments, selling or issuing stored value, or receiving money or monetary value for transmission to a location within or outside the United States. 2500

Additional Definitions

“Monetary value” means a medium of exchange, whether or not redeemable in money. “Payment instrument” means a check, draft, money order, traveler’s check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or instrument that is redeemable by the issuer in goods or services. “Virtual currency” means stored value that: (A) can be a medium of exchange, a unit of account, or a store of value; (B) has an equivalent value in money or acts as a substitute for money; (C) may be centralized or decentralized; and (D) can be exchanged for money or other convertible virtual currency. 2500

Exemptions

(a) This chapter does not apply to: (1) the United States or a department, agency, or instrumentality thereof; (2) the sale or issuance of payment instruments or stored value, or money transmission, by the U.S. Postal Service or by a contractor on behalf of the U.S. Postal Service; (3) a state, county, city, or any other governmental agency or governmental subdivision within a state; (4) a financial institution as defined in subdivision 11101(32) of this title, a financial institution holding company as defined in subdivision 11101(33) of this title, a credit union, an office of an international banking corporation, a branch of a foreign bank, a corporation organized pursuant to the Bank Services Company Act, or a corporation organized under the Edge Act under the laws of a state or the United States if the person does not issue, sell, or provide payment instruments or stored value through an authorized delegate that is not such a person; (5) electronic funds transfer of governmental benefits for a federal, state, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or a state or governmental subdivision, agency, or instrumentality thereof; (6) a board of trade designated as a contract market under the Commodity Exchange Act or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board of trade; (7) a registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant; (8) a person that provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from such registration granted under the federal securities laws to the extent of its operation as such a provider; (9) an operator of a payment system that provides processing, clearing, or settlement services, between or among persons excluded by this section or licensees, in connection with wire transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearing house transfers, or similar funds transfers to the extent of its operation as such; (10) a person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as such a broker-dealer; (11) the sale or issuance of stored value by a school to its students and employees; (12) a seller of goods or services that cashes payment instruments incidental to or independent of a sale and does not charge for cashing the payment instrument in excess of $1.00 per instrument; or (13) a debt adjuster licensed pursuant to chapter 133 of this title when engaged in the business of debt adjustment. (b) The Commissioner may issue an order exempting any person from this chapter when such person is performing services for the benefit of the United States or a department, agency, or instrumentality thereof, or for the benefit of any state, county, city, or any other governmental agency or governmental subdivision within a state. 2501

Registration Fees

$500 License/Registration Fee $1,000 Application Fee

Bond and Insurance Requirements

(a) Except as otherwise provided in subsection (b) of this section, the following rules apply: (1) A surety bond, letter of credit, or other similar security acceptable to the Commissioner of not less than $100,000.00 shall accompany an application for a license. (2) If an applicant proposes to provide money services at more than one location through authorized delegates or otherwise, the amount of the security shall be increased by $10,000.00 per location, not exceeding a total of $500,000.00. (b) The Commissioner may increase the amount of security required to a maximum of $2,000,000.00 based upon the financial condition of a licensee, as evidenced by reduction of net worth, financial losses, or other relevant criteria. (c) Security shall be in a form satisfactory to the Commissioner, and payable to the State for use of the State and for the benefit of any claimant against the licensee and its authorized delegates to secure the faithful performance of the obligations of the licensee and its authorized delegates with respect to money transmission. (d) The aggregate liability on a surety bond may not exceed the principal sum of the bond. A claimant against a licensee or its authorized delegate may maintain an action directly against the bond, or the Commissioner may maintain an action on behalf of the claimant against the bond. The power vested in the Commissioner by this subsection shall be in addition to any other powers of the Commissioner under this chapter. 2507

Bond Alternatives and Additional Insurance Requirements

In lieu of the security prescribed in this section, an applicant for a license or a licensee may provide security in a form otherwise permitted by the Commissioner. 2507

Capital Requirements

A licensee under this subchapter shall maintain a net worth of at least $100,000.00, determined in accordance with generally accepted accounting principles. 2510

Money Transmission License Required for Crypto Exchange?

Yes

State Comments or Statements

As of May 4, 2017, “virtual currency” was explicitly included in the definition of stored value, which is included in the definition of money transmission (“to engage in the business of selling or issuing payment instruments, selling or issuing stored value, or receiving money or monetary value for transmission to a location within or outside the United States”).