On June 16, the Vermont governor signed an omnibus bill (Act 142) that, among other things, imposes a permanent ban on virtual currency kiosks, creates a new licensing and disclosure regime for commercial financing providers, expands the state’s money transmission framework, and broadens financial privacy protections to cover non-bank regulated entities. The law will take effect on July 1, except that the commercial financing provisions will take effect July 1, 2027.

With respect to “virtual-currency kiosks,” the law prohibits any person from locating, operating, or otherwise making available a virtual-currency kiosk in Vermont and bars any person from offering or facilitating “virtual-currency business activity” via a “money transmission kiosk” in the state. Existing registrations for virtual-currency kiosks expire and terminate on July 1. The law requires virtual-currency kiosk operators to maintain records until July 1, 2031, and to provide full refunds, including any associated fees, for any transactions occurring after July 1 in violation of the ban if requested by the customer or the commissioner. The law also expands the definition of “money transmission” to include virtual-currency business activity.

With respect to commercial financing, the law creates a new licensing requirement for providers of sales-based financing and factoring transactions to recipients in Vermont beginning July 1, 2027. Providers must obtain a lender license, and those soliciting commercial financing on behalf of third parties must hold a loan solicitation license. Depository institutions, government entities, and sellers financing their own goods or services are exempt, as are transactions of $1 million or more. The law mandates specific disclosures for commercial financing transactions, including the total amount of commercial financing, finance charge, APR, disbursement amount, total repayment amount, and estimated term. Commercial financing provided primarily for personal, family or household use is deemed a “loan” subject to state lending laws. The law states that a provider may not establish a mechanism for automatically debiting a recipient’s deposit account unless the provider holds a “validly perfected security interest,” and that contracts made in knowing and willful violation of the licensing requirement are void. The commissioner may initiate rulemaking on commercial financing, though rules may not take effect until on or after July 1, 2027.