Senate Finance advances H.137 with mutual bank governance changes and one-year cryptocurrency kiosk moratorium

The Senate Finance Committee on April 29 moved H.137 forward after adopting two amendments addressing mutual savings bank governance and consumer protections for cryptocurrency kiosks, and then approved the bill as amended by voice vote, 7-0.

The committee adopted an amendment from the Vermont Bankers Association to change governance rules for mutual savings banks preparing to convert to holding companies. The amendment requires a majority of corporators to be depositors and specifies that at least two-thirds of corporators be independent (not employees, officers, directors, subsidiaries or affiliates). It also adds fiduciary duties for corporators to exercise authority in the best interests of depositors and to consider depositors, borrowers and the economic well-being of the communities the institution serves.

The committee also approved a cryptocurrency amendment that extends an existing moratorium on new physical cryptocurrency kiosks in Vermont for one additional year and applies that moratorium to the two kiosks currently operating in the state; the amendment does not change online cryptocurrency purchases. Committee members said the moratorium is intended to give regulators time to evaluate whether the consumer-protection provisions included in the bill are adequate before allowing additional kiosk deployments.

Committee members and staff walked through a number of technical changes in H.137 during the meeting. Staff described a set of mostly housekeeping updates covering confidentiality rules for regulated entities, adjustments to captive-insurance provisions (including clarifications on who may sign reports and when documents must be submitted under oath), changes to rate-filing procedures for property and casualty insurers (proposing filings 30 days before an increase takes effect rather than allowing filings 15 days after), and explicit anti-discrimination language for homeowners insurance relating to affordable housing. Several sections were described as conforming the text to model law or to existing statutory structure (including a cross-reference change tied to a repeal of "Chapter 21").

Other provisions staff reviewed included exemptions from money transmission licensing for certain small payroll processors, a provision allowing debtors to use discount points to buy down mortgage interest rates (noted as a provision supported by Rocket Mortgage), and a set of studies directed to the Department of Financial Regulation on fraud holds, coerced debt, and genetic-privacy issues. Staff also summarized proposed changes to Medigap/Medicare supplemental rate review procedures, including altered actuarial-review requirements for substantial rate increases (staff said a 10% threshold was discussed and that over 5,000 policyholders are affected in the specific Medigap example cited).

After the staff walkthrough the committee voted first on the Vermont Bankers Association amendment, then on the cryptocurrency kiosk amendment, and finally on reporting H.137 favorably as amended. Senator Chittenden moved the Bankers Association amendment and led the motions on the cryptocurrency amendment and the committee report. Each vote was taken by voice and recorded as 7-0-0 in favor; Senators recorded as voting yes were Chittenden, Bridal, Hardy, Baeck, Gulick, Maddox and Cummings.

Committee members said the kiosk moratorium is limited to physical kiosks and does not restrict online cryptocurrency purchases. Staff said the mutual-bank governance changes are intended to align Vermont's law with federal expectations and FDIC suggestions to strengthen protections for depositors when a mutual bank seeks to convert to a holding company; the Federal Reserve would make the final decision on a holding-company application.

Next steps: the committee reported H.137 favorably as amended and will include the two adopted amendments in its committee report when the bill moves to the floor. Committee members also signaled continued work on separate items, including a forthcoming revenue update and a yield-bill discussion scheduled ahead of an education-transformation bill the committee expects to take up next week.