US States Have Begun Requiring Cryptocurrency Bonds

The popularity of digital currencies is prompting several US states to require companies engaged in cryptocurrency trading to secure surety bonds to enhance investor protection.

With a cryptocurrency surety bond, investors are given an extra layer of protection in case they become victims of fraud or scams. Under the rules set by these states, companies engaging in digital currency transmission should be backed by surety bonds, with the amount corresponding to the volume of transactions to protect the money transmitter clients.

“Cryptocurrencies have a lot of benefits that have become answered prayers for the adherents. One is the seamless and secure transaction that it provides,”

said Greg Rynerson of Surety Bond Authority.

“Eliminating identity theft is another. And since there are no third-parties involved, you don’t have to pay for any expensive fees, or wait days for approval, or worry about your cryptocurrency being seized.”

States that require crypto surety bonds

There are currently at least five states require surety bonds for some forms of trading in cryptocurrencies, according to a recent article. These states are Connecticut, New Hampshire, New York, North Carolina, and Washington. The bonds range from $10,000 to as high as $250,000, with the actual cost of the bond running as low as one percent of the premium.

In addition to surety bonds and licensing requirements, states can require additional conditions for virtual currency traders. Some states oblige crypto traders to maintain a trust fund that is handled by a custodian, while others require digital currency exchanges to be subjected to regular third-party security auditing.

While individuals selling cryptocurrencies would not be directly affected by the surety bond requirement, traders that specialize in brokering virtual currencies can expect to see these instruments wielded by regulators with increasing frequency.

In all, digital currency surety bonds want to make sure the industry is operating in a safe and secure environment, Rynerson added.