Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Finance Virtual Currency Kiosks topic
No spam. Unsubscribe anytime.
Senate Finance reviews tighter rules for virtual-currency kiosks; no vote taken
Summary
The Senate Finance Committee heard testimony on draft language that would expand disclosures, identity checks, refund rights and fraud controls for virtual-currency kiosks; committee members expressed concern but did not vote and the bill remains under consideration.
Maria Veil, legislative counsel, outlined a package of consumer-protection changes on a bill affecting virtual-currency kiosks that would extend an existing moratorium and add transaction-level disclosures, identity-verification steps, mandatory receipts and enhanced refund rights.
The proposal, discussed in the Senate Finance Committee on April 25, would apply to Vermont’s licensed virtual-currency operators and kiosk devices. It would define “new customer” as a person whose first transaction with an operator occurred within the previous 30 days and would give new customers a full refund if they can demonstrate they were fraudulently induced and report the fraud to law enforcement and the operator within 90 days. Existing customers would be eligible for a refund of fees under similar reporting requirements.
The measure would require kiosk operators to display a customer warning on-screen before transactions, print or otherwise provide a retainable receipt that includes the digital-wallet address, transaction ID and the operator’s refund and contact information, and to show a customer the operator’s refund policy. For each kiosk transaction the operator would collect government-issued identification, the customer’s name, date of birth, telephone number, address and email, and take and retain a photograph of the customer. Operators would be strictly liable for violations of the identification provisions.
The draft raises the daily transaction limit for new kiosk customers from $1,000 to $2,000 and sets a $5,000 daily limit for existing customers. It would raise the statutory fee cap from 3 percent (or $5, whichever applied) to 15 percent, whichever is greater, citing industry costs for fraud remediation.
The Department of Financial Regulation (DFR) and an industry representative described how the draft aims to address scam activity tied to kiosks. Aaron Perron, deputy commissioner for the banking division at DFR, told the committee that DFR worked with industry on the language and characterized the refund provisions as among the strongest in active state legislation. Perron said DFR received many complaints and news reports about scams in which victims were directed to convert cash to cryptocurrency at kiosks and then had funds moved away quickly into other wallets.
An industry representative identified in testimony as a CoinFlip representative said the company had agreed to the consumer protections now reflected in the draft, including printed receipts, photo capture, blockchain analytics and refund procedures for new customers. The witness said blockchain-analytics tooling and identity capture would reduce anonymity and enable law-enforcement referral where suspicious transfers occur.
The draft would require operators to use blockchain analytics provided by an established third party, to maintain an anti‑fraud policy approved by the operator’s governing board, and to appoint full-time compliance and consumer-protection officers who hold no more than a 20 percent ownership stake in the operator. It would also require live customer support and real-time “live screening” for certain transactions — for example a first-time customer over age 60 or a customer attempting more than $5,000 in a consecutive 10-day period.
Committee members pressed on privacy, the practical effects of on-screen identity requests, and whether the higher fee cap is justified. Perron said the higher cap reflected the industry’s cost of remediation when operators must refund customers and that DFR supported the compromise. Some members said they were uncomfortable with kiosks but acknowledged the draft extends a moratorium and applies to only two currently operational kiosks in Vermont; a third licensed kiosk is closed, per testimony.
No committee vote was taken on the kiosk language. Members asked DFR and industry witnesses to return for additional questions and flagged a separate amendment proposed by the Vermont Bankers Association concerning mutual financial institutions and corporate governance that remains in the draft.
