CSHB 324(JUD): "An Act relating to virtual currency kiosks; relating to transactions involving virtual currency; and relating to unfair trade or deceptive acts or practices."
00 CS FOR HOUSE BILL NO. 324(JUD) 01 "An Act relating to virtual currency kiosks; relating to transactions involving virtual 02 currency; and relating to unfair trade or deceptive acts or practices." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 06.55 is amended by adding new sections to read: 05 Article 1A. Virtual Currency Kiosks. 06 Sec. 06.55.115. Virtual currency kiosk operator licensing and reporting. 07 (a) A virtual currency kiosk operator may not engage in a virtual currency kiosk 08 transaction or hold itself out as being able to engage in virtual currency kiosk 09 transactions with or on behalf of another person unless the virtual currency kiosk 10 operator holds a money transmission license. 11 (b) A virtual currency kiosk operator may not locate a virtual currency kiosk 12 in the state unless the virtual currency kiosk operator registers with and obtains the 13 prior approval of the department. 14 Sec. 06.55.120. Mandatory hold for first transaction. If a user has not
01 previously engaged with a virtual currency kiosk operator, the virtual currency kiosk 02 operator shall put a 48-hour hold on the first virtual currency kiosk transaction that the 03 user engages in with the virtual currency kiosk operator before completing the 04 transaction. The virtual currency kiosk operator may not engage in another transaction 05 with the user until the 48-hour hold has expired. 06 Sec. 06.55.125. Reporting. (a) Within 45 days after the end of each calendar 07 quarter, a virtual currency kiosk operator shall submit a quarterly report to the 08 department for each location in the state at which the person operates a virtual 09 currency kiosk. The report must include the following: 10 (1) the legal name of the virtual currency kiosk operator; 11 (2) any fictitious or trade name used by the virtual currency kiosk 12 operator; 13 (3) the virtual currency kiosk operator's physical address; 14 (4) the date that operation of a virtual currency kiosk began at the 15 location; 16 (5) if applicable, the date the virtual currency kiosk operator ceased 17 operating a virtual currency kiosk at the location; 18 (6) virtual currency addresses used by the virtual currency kiosk 19 operator to service users at every location in the state; and 20 (7) the number of transactions declined because of suspicion of illicit 21 activity. 22 (b) On or before March 31 of each year, a virtual currency kiosk operator shall 23 submit an annual report to the department relating to the virtual currency kiosk 24 operator's business conducted in the state during the previous calendar year. The 25 report shall be on a form prescribed by the department and must include 26 (1) the gross revenue attributable to virtual currency transactions 27 conducted through virtual currency kiosks in the state; 28 (2) copies of each complaint filed by a user against the virtual currency 29 kiosk operator with the Better Business Bureau or a state or federal agency other than 30 the department and a description of the resolution, if any, of each complaint; 31 (3) the total number and value of virtual currency transactions the
01 virtual currency kiosk operator conducted through virtual currency kiosks in the state; 02 (4) the total number of refunds requested by users, including the 03 number of requests granted and the number denied by the virtual currency kiosk 04 operator; 05 (5) the total dollar amount of refunds the virtual currency kiosk 06 operator provided to users; 07 (6) contact details for the virtual currency kiosk operator's compliance 08 officer; 09 (7) the total number of virtual currency kiosk locations; and 10 (8) the total number and dollar amount of suspicious transaction 11 reports the virtual currency kiosk operator was required to file under 31 U.S.C. 5311 - 12 5336. 13 (c) Upon request, a virtual currency kiosk operator shall make available to the 14 department information on any transaction processed by the virtual currency kiosk or 15 any user of the virtual currency kiosk, including information related to transactions 16 that were attempted but denied. 17 (d) Data collected by the department under this section is confidential and is 18 not a public record for purposes of AS 40.25.110 - 40.25.140 but may be released in 19 composite form. The department shall prepare and make available to the public an 20 annual report summarizing the data reported to the department under this section. 21 Sec. 06.55.130. Disclosures. (a) A virtual currency kiosk operator shall 22 disclose in a clear, conspicuous, and easily readable manner in the chosen language of 23 the user all relevant terms and conditions generally associated with the products, 24 services, and activities of the virtual currency kiosk operator and virtual currency, 25 including transaction charges collected and exchange rates used by the virtual 26 currency kiosk operator. 27 (b) When a user engages with a virtual currency kiosk, the virtual currency 28 kiosk operator shall obtain acknowledgment of receipt of all disclosures required 29 under this section. 30 (c) The disclosures required under this section must address the following: 31 (1) a warning, written prominently and in bold type stating
01 WARNING: this technology can be used to defraud you. If 02 someone asked you to deposit money in this machine or is on the 03 telephone with you and claims to be a friend or family member, 04 government agent, computer software representative, bill collector, law 05 enforcement officer, or anyone you do not know personally 06 IMMEDIATELY STOP THIS TRANSACTION and contact your local 07 law enforcement and the kiosk operator. This may be a scam. NEVER 08 SEND MONEY to someone you don't know; 09 (2) a warning of the material risks associated with virtual currency, 10 including a warning that virtual currency is not issued or backed by the United States 11 government; is not legal tender in the United States; is not subject to protections by the 12 Federal Deposit Insurance Corporation, National Credit Union Administration, or 13 Securities Investor Protection Corporation; and that its value relative to the United 14 States dollar may fluctuate significantly; 15 (3) the name, address, and telephone number of the owner of the kiosk 16 and the days, time, and means by which a user can contact the owner for assistance; 17 (4) the address and telephone number of the Alaska state troopers, 18 local law enforcement, and the department, along with a message that a user may 19 report fraud to any of those entities, shall be displayed on or at the location of a virtual 20 currency kiosk or on the first screen of a kiosk; and 21 (5) other disclosures that the department requires by regulation. 22 (d) The disclosures required under this section do not affect the obligation of a 23 virtual currency kiosk operator to issue a refund under AS 06.55.160. 24 (e) After each transaction, the virtual currency kiosk operator shall provide 25 users with paper and electronic receipts. In addition to the information required under 26 AS 06.55.830, the receipt must include the following information: 27 (1) the virtual currency kiosk operator's name and toll-free customer 28 service telephone number; 29 (2) relevant contact information to report fraud to the Alaska state 30 troopers, local law enforcement, and the department; 31 (3) the type, value, date, and time of the transaction;
01 (4) each applicable virtual currency address and transaction hash, if 02 applicable; 03 (5) all charges incurred in the transaction; 04 (6) the exchange rate used between the virtual currency and United 05 States dollar; 06 (7) if the transaction is subject to a first transaction hold required under 07 AS 06.55.120, notice of the hold and when the hold expires; 08 (8) a statement of the virtual currency kiosk operator's refund policy; 09 (9) any additional information the department requires by regulation. 10 Sec. 06.55.135. Fraud and anti-money laundering policy. A virtual currency 11 kiosk operator shall take reasonable steps to detect and prevent fraud and money 12 laundering, including establishing and maintaining a written anti-fraud policy and 13 abiding by 31 U.S.C. 5311 - 5336 (Bank Secrecy Act). The anti-fraud and money 14 laundering policy must, at a minimum, 15 (1) identify and assess fraud-related and money laundering-related risk 16 areas; 17 (2) establish procedures and controls to protect against identified risks 18 of fraud and money laundering; 19 (3) allocate responsibility for monitoring risks of fraud and money 20 laundering; and 21 (4) require periodic evaluation and revision of the anti-fraud and 22 money laundering procedures, controls, and monitoring mechanisms. 23 Sec. 06.55.140. Blockchain analytics. A virtual currency kiosk operator shall 24 use blockchain analytics and tracing software to assist in the prevention of sending 25 virtual currency to a virtual currency wallet known or likely to be affiliated with 26 fraudulent activity at the time of a transaction and to detect transaction patterns 27 indicative of fraud or other illicit activities. Virtual currency kiosk operators shall 28 block transactions to virtual currency wallets associated with overseas exchanges that 29 are inaccessible to users in the United States. A virtual currency kiosk operator shall 30 make available to the department, upon request, evidence of their current use of 31 blockchain analytics.
01 Sec. 06.55.145. Posted warnings. A virtual currency kiosk operator shall post 02 a conspicuous written warning in plain view of the virtual currency kiosk providing 03 notice to users that criminals may direct victims of fraud or scams to send money by 04 way of virtual currency kiosks. This warning must include the virtual currency kiosk 05 operator's toll-free customer service telephone number. 06 Sec. 06.55.150. User identification. (a) A virtual currency kiosk operator or 07 their authorized delegate shall verify the identity of a user before accepting payment 08 from the user for a virtual currency transaction. A virtual currency kiosk operator or 09 their authorized delegate shall obtain a copy of a government-issued identification 10 card that identifies the user and shall collect additional user information, including the 11 user's name, date of birth, telephone number, address, and electronic mail address, 12 before accepting a payment from the user at a virtual currency kiosk. 13 (b) A virtual currency kiosk operator may not allow a user to engage in a 14 transaction at a virtual currency kiosk under any name, account, or identity other than 15 the user's own true name and identity. 16 (c) A virtual currency kiosk operator is strictly liable for a violation of this 17 section. 18 Sec. 06.55.155. Training. On an annual basis, a virtual currency kiosk 19 operator shall provide the store or location where the kiosk is located with staff 20 training materials approved by the department. The training materials must outline 21 how criminals may exploit virtual currency kiosks in illicit activity, including red flag 22 indicators that a virtual currency kiosk user may be the victim of fraud or scams as 23 well as signs of financial abuse and exploitation. The virtual currency kiosk operator 24 may not prohibit or prevent staff at the location of the virtual currency kiosk from 25 educating virtual currency kiosk users on fraud and scams. 26 Sec. 06.55.160. Refunds. (a) For cases related to fraud, a virtual currency 27 kiosk operator shall issue a full refund to a user if the user 28 (1) engaged in a transaction involving the virtual currency kiosk that 29 was affected by fraud; 30 (2) informed the virtual currency kiosk operator of the fraudulent 31 nature of the transaction or transactions at issue within 90 days after the last
01 transaction or within 90 days after the user became aware of the fraud, whichever is 02 later; and 03 (3) within 120 days after contacting the virtual currency kiosk 04 operator, submitted to the virtual currency kiosk operator a police report, report by the 05 department, or a sworn statement detailing the fraudulent nature of the transaction. 06 (b) If a user requests that a transaction be cancelled during a first transaction 07 hold required under AS 06.55.120, the virtual currency kiosk operator shall cancel the 08 transaction and provide the user with a full refund. 09 (c) If the conditions for a refund under (a) or (b) of this section are met, the 10 virtual currency kiosk operator shall issue the refund to the user 11 (1) in the original currency provided by the user; 12 (2) in the full amount of all transactions paid by the user at the time of 13 the transaction, including transaction charges, regardless of any acknowledgment the 14 user may have made before finalizing the transactions; and 15 (3) within 72 hours after receiving a copy of the police report, report 16 by the department, or sworn statement for a refund required under (a) of this section or 17 a request that the transaction be cancelled during a first transaction hold for a refund 18 required under (b) of this section. 19 Sec. 06.55.165. Communication. For all communication between the virtual 20 currency kiosk operator and the user, the virtual currency kiosk operator shall provide 21 written notices in both English and Spanish and communicate with the user in their 22 preferred language through staff, oral interpretation services, or auxiliary aids and 23 services. 24 Sec. 06.55.170. Transaction limit. (a) A virtual currency kiosk operator may 25 not accept transactions totaling more than $1,000, or the equivalent in virtual currency, 26 from a user in one calendar day. 27 (b) A virtual currency kiosk operator may not accept transactions totaling 28 more than $10,000, or the equivalent in virtual currency, from a user in a 30-day 29 period. 30 (c) The limits in this section apply to all products offered by a virtual currency 31 kiosk operator. The use of alternative products, including online purchasing or over-
01 the-counter platforms, may not be employed to circumvent or exceed the limits in this 02 section. 03 Sec. 06.55.175. Transaction fees. A virtual currency kiosk operator may not 04 collect fees from a user for a transaction that total more than three percent of the 05 transaction value in United States dollars or the equivalent in virtual currency. 06 Sec. 06.55.180. Customer service. A virtual currency kiosk operator shall 07 provide live customer service during operating hours, including the hours between 08 8:00 a.m. and 10:00 p.m. Alaska time. A customer service toll-free number must be 09 displayed on the virtual currency kiosk or the virtual currency kiosk screen. 10 Sec. 06.55.185. Law enforcement access to investigative information. A 11 virtual currency kiosk operator shall provide a dedicated communications line for 12 government agencies to contact the virtual currency kiosk operator. The dedicated line 13 must be an electronic mail address or telephone number based in the United States. A 14 law enforcement agency or a regulatory agency, including the department, may use the 15 dedicated line to communicate with the virtual currency kiosk operator in the event of 16 a fraud report from a user. The dedicated line must be regularly monitored. Upon 17 request from a law enforcement agency or regulatory agency, a virtual currency kiosk 18 operator must provide the agency with trace findings and grant the agency assistance 19 with blockchain analytics to assist in an investigative matter related to potential fraud. 20 Sec. 06.55.190. Penalties. (a) A virtual currency kiosk operator that violates 21 AS 06.55.115 - 06.55.200 commits an unfair trade or deceptive act or practice in 22 violation of AS 45.50.471. 23 (b) A virtual currency kiosk operator operating in this state without a money 24 transmission license or that otherwise violates AS 06.55.115 - 06.55.200 is subject to 25 administrative action, including civil penalties, that may, notwithstanding 26 AS 06.55.605, include the seizure of any virtual currency kiosk and the forfeiture of 27 all fees received from customers in the state during the period of unlicensed activity or 28 noncompliance. 29 Sec. 06.55.195. Municipal regulations. Nothing in AS 06.55.115 - 06.55.200 30 may be interpreted to preempt or nullify a municipal ordinance that provides greater 31 protections, requirements, or restrictions if the municipal ordinance does not directly
01 conflict with AS 06.55.115 - 06.55.200. 02 Sec. 06.55.200. Definitions. In AS 06.55.115 - 06.55.200, 03 (1) "blockchain analytics" means the analysis of data from blockchains 04 or public distributed ledgers, including associated transaction information; 05 (2) "blockchain analytics and tracing software" includes a software 06 service that uses blockchain analytics to provide risk-specific information and tracing 07 of virtual currency wallet addresses; 08 (3) "charges" include 09 (A) fees or expenses paid by a user; and 10 (B) the difference between the market price of the virtual 11 currency and the price of the virtual currency charged to the user; 12 (4) "user" means an individual or entity that initiates, authorizes, or 13 completes a transaction involving virtual currency through a virtual currency kiosk for 14 the purpose of purchasing, selling, transferring, or otherwise exchanging virtual 15 currency; 16 (5) "virtual currency" means an electronic asset that confers economic, 17 proprietary, or access rights or powers and is recorded using cryptographically secured 18 distributed ledger technology, or any similar analogue; 19 (6) "virtual currency address" means an alphanumeric identifier 20 associated with a virtual currency wallet that identifies the location to which a virtual 21 currency transaction can be sent; 22 (7) "virtual currency kiosk" means a person acting on the behalf of, or 23 a mechanical agent of, the virtual currency kiosk operator to enable the virtual 24 currency kiosk operator to facilitate the exchange of virtual currency for money, bank 25 credit, or other virtual currency by connecting directly to a separate virtual currency 26 exchange, drawing on virtual currency in the possession of the electronic terminal's 27 operator, or by another method; 28 (8) "virtual currency kiosk operator" means a person that engages in 29 virtual currency business activity by way of a virtual currency kiosk located in the 30 state or a person that owns, operates, manages, or provides custodial or noncustodial 31 services for a virtual currency kiosk located in the state through which virtual currency
01 business activity is offered; 02 (9) "virtual currency kiosk transaction" means a transaction conducted 03 or performed, in whole or in part, by electronic means through a virtual currency kiosk 04 or a transaction made at a virtual currency kiosk to purchase virtual currency with 05 United States dollars or to sell virtual currency for United States dollars; 06 (10) "virtual currency wallet" means a software application or other 07 mechanism providing a means to hold the keys necessary to access and transfer virtual 08 currency. 09 * Sec. 2. AS 06.55.840 is amended by adding a new subsection to read: 10 (b) This section does not apply to a refund requested for a virtual currency 11 kiosk transaction under AS 06.55.115 - 06.55.200. 12 * Sec. 3. AS 06.55.990(15) is amended to read: 13 (15) "money transmission" 14 (A) means 15 (i) selling or issuing payment instruments or stored 16 value, or receiving money or monetary value for transmission; or 17 (ii) operating a virtual currency kiosk; 18 (B) [, BUT] does not include the provision solely of delivery, 19 online services, telecommunications services, or network access; 20 * Sec. 4. AS 45.50.471(b) is amended by adding a new paragraph to read: 21 (58) violating AS 06.55.115 - 06.55.200 (virtual currency kiosks).