House committee weighs licensing and protections for cryptocurrency kiosks amid elder fraud concerns

The House Economic Matters Committee heard Senate Bill 305, a bill to create a state registration and oversight framework for cryptocurrency kiosks while adding consumer protections aimed at reducing fraud.

Senator Bridal, presenting the bill, said the legislation was designed "to limit the fraud that's happening with bitcoin" while allowing legitimate kiosk operators to continue serving customers. He explained the bill would require clear labeling of kiosks, daily or first-transaction limits and other consumer safeguards.

Frank Boston, representing CoinFlip, told the committee, "we are in 49 states and we have 45 plus locations in Maryland," and said CoinFlip supports "Maryland licensure as it helps protect consumers and brings consistency to the industry." Tammy Bresnahan, senior director of advocacy for AARP Maryland, urged support on public-safety grounds, telling the committee the kiosks were a target for scammers and citing FBI data: "In 2023 alone, the FBI received over 5,000 complaints involving crypto kiosk with the total loss exceeding a hundred and 89,000,000. More than 70 65% of those were people 60 and older." Ethan McClelland, director of government relations at Bitcoin Depot, called the bill a "fine compromise" between industry and consumer advocates and praised the licensing and safeguards proposed.

Key consumer protections described in testimony included requirements that kiosks be labeled clearly as cryptocurrency kiosks rather than as ATMs; on-screen and physical warnings such as "do not pay bail bonds at this machine"; a $2,000 limit on a first purchase to reduce large immediate losses for first-time users; transaction monitoring and reporting obligations; and a state registration or licensing regime that would permit oversight by the Office of Financial Regulation (OFR).

Committee members pressed how the protections would work in practice. The commissioner of financial regulation (identified in testimony as Commissioner Salazar) explained that the OFR would implement regulations, require reporting from operators and could coordinate with law enforcement, but said the department did not plan routine physical examinations of kiosk machines absent a complaint or other indication of wrongdoing. "We will be able to go out and look at them. We'll also be able to get reports from companies as to what's happening. But right now, I have no intent to send examiners out to actually look at the machines," the commissioner said.

Speakers described the operator business model: kiosks primarily accept cash for purchases of cryptocurrency that are sent to the buyer's digital wallet after identity verification and sanctions screening. Industry witnesses noted some machines also allow selling cryptocurrency for cash; others are buy-only. Questions from committee members focused on labeling, whether warnings would deter fraud, how limits would reduce repeated scamming, and the reach of state regulation versus federal requirements such as registration with FinCEN under the Bank Secrecy Act.

No committee vote was recorded at the hearing. Supporters asked the committee for a favorable report; opponents were not represented in the testimony heard.