My short answer to them is that it's issued by another jurisdiction. (Which it is.)
I try not to engage them in further conversation on the matter because then I have to explain 9-11 and the fact that the United States doesn't actually exist and the concept of territorial exclusivity and that the issuing jurisdiction has as much right to issue a plate as does Vermont because the states have lost any moral claim to territorial exclusivity because they do not defend their citizens against agents acting under color of law of the now-defunct United States. It's a bit complicated.
Then they ask about insurance. Well... It's hard if not impossible to buy insurance to drive a car that is not registered with a state. No insurance company that I am aware of has yet realized that the states appear not to legally exist.
