Legislation from Dem lawmakers would create new regulations and licensing requirements for cryptocurrency kiosks, which bill authors say have led to “a shocking amount” of fraud.
These self-service machines are used to buy and sell digital currencies, and have become much more widespread in recent years.
A cosponsorship memo for the bill notes the number of these kiosks in the United States has risen from 4,000 at the start of 2020 to nearly 30,000 today. Wisconsin likely has more than 500 such kiosks, according to an article posted by the Wisconsin Bankers Association.
Sen. Kelda Roys, D-Madison, and Rep. Ryan Spaude, D-Ashwaubenon, recently began circulating the memo to seek support for the legislation.
They note consumers using these kiosks are often targeted with fraudulent practices such as “misleading” fees and pricing, and can lose thousands of dollars from scams that rely on these machines.
“While they provide convenient access to cryptocurrency, they have also created a bonanza for fraudsters and scammers, due to their lack of regulation,” the lawmakers wrote.
Under the bill, an operator of virtual currency kiosks would need to be licensed as a money transmitter and would be subject to new regulatory requirements in addition to those that already apply to money transmitters. The licensing process would fall under the Department of Financial Institutions’ Division of Banking, according to an analysis by the Legislative Reference Bureau.
Along with defining the concept of a virtual currency kiosk, the legislation would also require the operator to attach a printed fraud warning on the front of the machine and also display it electronically on its screen. Users would have to acknowledge the warning to proceed.
In addition to these safeguards, the bill would cap cryptocurrency kiosk transactions to $1,000 per customer per day. And it would limit user fees to either $5 or 3% of the transaction amount, whichever is greater.
Kiosk operators would also be required to issue refunds to customers if it was that customer’s first transaction or if it occurred within 72 hours of the customer’s first transaction, if the customer was “fraudulently induced” into the transaction, and if the customer notifies the operator and law enforcement or government entity within 30 days of the fraudulent transaction.
“Republican and Democratic legislators around the country are acting quickly to stop the victimization of their residents,” bill authors wrote. “Wisconsinites deserve the freedom to benefit from emerging technologies like cryptocurrencies and crypto kiosks, without the rampant risk of being defrauded or scammed.”
The cosponsorship deadline is Wednesday.
See the memo.
See an earlier story on cryptocurrency legislation in the state.
