The Vermont Statutes Online

Title 8 : Banking and Insurance

Chapter 079 : Money Services

Subchapter 010 : VIRTUAL CURRENCY

• § 2575. Property interests and entitlements to virtual currency

  (a) A person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity that has control of virtual currency or provides virtual-currency storage to, for, or on behalf of one or more persons shall maintain custody and control of virtual currency in an identical type and amount of virtual currency sufficient to satisfy the aggregate entitlements of such persons to such identical types and amounts of virtual currency.

  (b) For the purposes of subsection (a) of this section, units of virtual currency are only of an identical type and amount if such units are fungible in all respects, including having the same issuer and being identical in amount, market capitalization, circulating supply, name, U.S. dollar equivalent of virtual currency, liquidity, use, rights, restrictions, functionality, permissions, and any other material attribute.

  (c) If a licensee violates subsection (a) of this section, the property interests of the persons in the virtual currency are pro rata property interests in the type of virtual currency to which the persons are entitled, without regard to the time the persons became entitled to the virtual currency or the licensee obtained control of the virtual currency.

  (d) The virtual currency referred to in this section is and shall be:

  (1) held for the persons entitled to the virtual currency;

  (2) not property of the licensee or any person required to be licensed under this chapter;

  (3) not subject to any claims, liens, or encumbrances of creditors of the licensee or any person required to be licensed under this chapter; and

  (4) deemed to be a permissible investment under this chapter to the extent that there is an outstanding money transmission obligation owed to a customer in such type and amount of virtual currency.

  (e) A person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity is prohibited from selling, transferring, assigning, lending, hypothecating, pledging, or otherwise using or encumbering virtual currency stored, held, controlled, or maintained by, or under the custody or control of, such licensee on behalf of another person except for the sale, transfer of ownership, or assignment of such assets at the direction of such other person.

  (f) A person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity shall not directly or indirectly use or engage any other person, including any virtual-currency control-services vendor, to store or hold custody or control of any virtual currency for or on behalf of any customer in this State, unless such other person is licensed under subchapter 2 of this chapter to engage in virtual-currency business activity, a financial institution or credit union that is exempt from licensing under section 2504(7) of this chapter, or a qualified custodian approved by the Commissioner by rule or order to hold virtual currency on behalf of customers in this State.

  (g) Virtual currency held in violation of subsection (f) of this section shall not be deemed to be a permissible investment for purposes of satisfying a licensee’s obligations under section 2542(a) of this chapter, but shall be deemed to be a permissible investment for purposes of section 2542(c)–(e) of this chapter.

  (h) The Commissioner may by rule or order adopt additional consumer protections concerning virtual currency, including:

  (1) rules regarding the segregation of virtual currencies and accounts held for or on behalf of customers from a licensee’s own virtual currencies and assets;

  (2) rules related to the custody, storage, security, ownership of, and title to permissible investments and customer virtual currencies and assets;

  (3) rules related to the use of virtual-currency control service vendors or other custodians to hold custody or control of virtual currency;

  (4) rules related to audit requirements for customer assets;

  (5) rules setting standards, limits, prohibitions, disclosure requirements, and procedures regarding the types of virtual currencies and related services, activities, and transactions that licensees may offer in this State as may be necessary or appropriate for the protection of consumers or compliance with the terms of this chapter;

  (6) rules requiring compliance with specific provisions of the Uniform Commercial Code; and

  (7) any rules as may be necessary or appropriate for the protection of consumers or necessary or appropriate to effectuate the purposes of this chapter. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)