Connecticut has enacted Public Act 25-66 (the “Act”), a substantial modernization of its Money Transmission Act (“MTA”) that brings digital wallets, virtual currency activity, and youth-oriented money-sharing applications squarely within the state’s regulatory framework. Effective as of October 1, 2025, Connecticut’s amendments signal a proactive approach to digital-asset regulation, aligning it with jurisdictions pursuing greater oversight over virtual currency transmission.
One of the most notable changes is the expansion of what constitutes money transmission. The amended law now expressly covers activities conducted through digital wallets, including functionalities that store or route virtual currency or tokenized value on behalf of consumers. The definition of “stored value” has been updated to encompass electronic or digital records that represent a claim against an issuer, aligning Connecticut’s statute with modern payment and fintech technologies.
Virtual-asset custody standards have also been expanded. Virtual currency transmitters may not sell, transfer, pledge, or otherwise use customer-owned virtual currency unless acting at the customer’s direction. Any entity holding virtual currency for a transmitter must itself be a licensed money transmitter, an FDIC-insured bank or credit union, or a third party expressly approved by the Banking Commissioner. This significantly narrows the universe of permissible custodians and underscores Connecticut’s emphasis on safeguarding digital assets. Complementing these rules, the Act codifies that customer-held virtual currency constitutes a proportional property interest, strengthening consumer protections in the event of insolvency or disputes.
Detailed disclosure and receipt requirements, previously applicable only to kiosk operators, have now been extended to all virtual currency transmitters. Customers must receive clear and comprehensive information, both at onboarding and before each transaction, including fee transparency, liability allocations for unauthorized transfers, and prominent warnings regarding the potential irreversibility of virtual currency transactions.
Additionally, the Act strengthens advertising restrictions for money-transmission licensees. In addition to existing prohibitions on deceptive or misleading statements, licensees may not indicate that customer funds are FDIC-insured unless those funds are placed in a deposit account at an FDIC-insured depository institution in a manner that qualifies for coverage under federal law. Any permissible reference to FDIC insurance must clearly identify the insured institution, accurately describe the precise extent and conditions of coverage, and avoid implying that the licensee, or any virtual currency, digital asset, or other non-deposit product, is itself FDIC-insured.
Beyond refining the regulatory structure for transmitters, the Act introduces two policy measures with broader implications for consumer protection and governmental risk. It restricts Connecticut and its political subdivisions from accepting payment in virtual currency or investing in virtual-asset holdings, a notable departure from states that are exploring the governmental adoption of digital-asset technologies and a clear signal of the state’s more conservative public-sector posture. At the same time, it establishes a first-of-its-kind framework governing minors’ money-sharing applications, requiring licensees to verify the identity of a parent or legal guardian before opening an account, honor structured account-deletion requests, and comply with strict deadlines for ceasing the processing of a minor’s personal data. Together, these provisions underscore Connecticut’s broadened focus on consumer protection as it modernizes private-sector regulation while maintaining caution at the governmental level.
Taken together, these amendments position Connecticut alongside states adopting the Money Transmission Modernization Act’s principles, while layering in more oversight of virtual-currency custody, digital-wallet providers, and youth-oriented financial apps. For existing licensees and new entrants, the Act invites early compliance reviews, particularly regarding custody arrangements, disclosures, agent oversight, and marketing practices, to ensure readiness with these newly effective laws.
