Disclosure and consumer protections for users of virtual currency kiosks modified.

A bill for an act

relating to virtual currency kiosk operators; modifying disclosure and consumer

protections for users of virtual currency kiosks; amending Minnesota Statutes

2024, sections 53B.69, subdivision 10, by adding subdivisions; 53B.74; 53B.75,

subdivisions 1, 2, 3, 4, 5, by adding subdivisions; proposing coding for new law

in Minnesota Statutes, chapter 53B; repealing Minnesota Statutes 2024, section

53B.69, subdivisions 3b, 3c.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 53B.69, is amended by adding a subdivision

to read:

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Subd. 1a.

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Blockchain analytics.

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"Blockchain analytics" means the analysis of data from

blockchains or public distributed ledgers, including associated transaction information.

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Sec. 2.

Minnesota Statutes 2024, section 53B.69, is amended by adding a subdivision to

read:

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Subd. 1b.

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Blockchain analytics and tracing software.

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"Blockchain analytics and tracing

software" means a software service that uses blockchain analytics data to provide risk-specific

information and tracing of virtual currency wallet addresses, among other things.

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Sec. 3.

Minnesota Statutes 2024, section 53B.69, is amended by adding a subdivision to

read:

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Subd. 5a.

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User.

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"User" means a person that initiates, authorizes, or completes a transaction

involving virtual currency through a virtual currency kiosk to purchase, sell, transfer, or

otherwise exchange virtual currency.

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Sec. 4.

Minnesota Statutes 2024, section 53B.69, subdivision 10, is amended to read:

Subd. 10.

Virtual currency kiosk.

"Virtual currency kiosk" means
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an electronic terminal

acting
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a person acting on behalf or
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as a mechanical agent of the virtual currency kiosk

operator to enable the virtual currency kiosk operator to facilitate the exchange of virtual

currency for money, bank credit, or other virtual currency, including but not limited to by

(1) connecting directly to a separate virtual currency exchanger that performs the actual

virtual currency transmission, or (2) drawing upon the virtual currency in the possession of

the electronic terminal's operator.

Sec. 5.

Minnesota Statutes 2024, section 53B.74, is amended to read:

53B.74 VIRTUAL CURRENCY BUSINESS ACTIVITIES; ADDITIONAL

REQUIREMENTS.

(a) A licensee engaged in virtual currency business activities may include virtual currency

in the licensee's calculation of tangible net worth, by measuring the average value of the

virtual currency in United States dollar equivalent over the prior six months, excluding

control of virtual currency for a person entitled to the protections under section
53B.73
.

(b) A licensee must maintain, for all virtual-currency business activity with or on behalf

of a person five years after the date of the activity, a record of:

(1) each of the licensee's transactions with or on behalf of the person, or for the licensee's

account in Minnesota, including:

(i) the identity of the person;

(ii) the form of the transaction;

(iii) the amount, date, and payment instructions given by the person; and

(iv) the account number, name, and United States Postal Service address of the person,

and, to the extent feasible, other parties to the transaction;

(2) the aggregate number of transactions and aggregate value of transactions by the

licensee with or on behalf of the person and for the licensee's account in this state, expressed

in the United States dollar equivalent of the virtual currency for the previous 12 calendar

months;

(3) each transaction in which the licensee exchanges one form of virtual currency for

money or another form of virtual currency with or on behalf of the person;

(4) a general ledger posted at least monthly that lists all of the licensee's assets, liabilities,

capital, income, and expenses;

(5) each business-call report the licensee is required to create or provide to the department

or NMLS;

(6) bank statements and bank reconciliation records for the licensee and the name,

account number, and United States Postal Service address of each bank the licensee uses

to conduct virtual-currency business activity with or on behalf of the person;

(7) a report of any dispute with the person; and

(8) a report of any virtual-currency business activity transaction with or on behalf of a

person which the licensee was unable to complete.

(c) A licensee must maintain records required by paragraph (b) in a form that enables

the commissioner to determine whether the licensee is in compliance with this chapter, any

court order, and law of Minnesota other than this chapter.

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(d) A licensee must provide the commissioner with a list of all kiosk locations and report

new locations added or locations closed within one month of the date the addition or closing

occurs.

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(e) A licensee must provide live customer service through a toll-free number that is

operational during operating hours, but at a minimum during the hours between 8:00 a.m.

to 10:00 p.m. central time. The customer service toll-free number must be displayed on the

virtual currency kiosk or the virtual currency kiosk screen.

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Sec. 6.

Minnesota Statutes 2024, section 53B.75, subdivision 1, is amended to read:

Subdivision 1.

Disclosures on material risks.

(a) Before entering into an initial virtual

currency transaction for, on behalf of, or with a person, the virtual currency kiosk operator

must disclose in a clear, conspicuous, and easily readable manner all material risks generally

associated with virtual currency. The disclosures must be displayed on the screen of the

virtual currency kiosk with the ability for a person to acknowledge the receipt of the

disclosures. The disclosures must include at least the following information:

(1) virtual currency is not legal tender
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,
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and is not issued,
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backed
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,
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or insured by the

government
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, and
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;
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accounts and value balances are not subject to Federal Deposit Insurance

Corporation, National Credit Union Administration, or Securities Investor Protection

Corporation protections
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; and virtual currency's value relative to the United States dollar

may fluctuate significantly
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;

(2) some virtual currency transactions are deemed to be made when recorded on a public

ledger, which may not be the date or time when the person initiates the transaction;

(3) virtual currency's value may be derived from market participants' continued

willingness to exchange fiat currency for virtual currency, which may result in the permanent

and total loss of a particular virtual currency's value if the market for virtual currency

disappears;

(4) a person who accepts a virtual currency as payment today is not required to accept

and might not accept virtual currency in the future;

(5) the volatility and unpredictability of the price of virtual currency relative to fiat

currency may result in a significant loss over a short period;

(6) the nature of virtual currency means that any technological difficulties experienced

by virtual currency kiosk operators may prevent access to or use of a person's virtual

currency; and

(7) any bond maintained by the virtual currency kiosk operator for the benefit of a person

may not cover all losses a person incurs.

(b) The virtual currency kiosk operator must provide an additional disclosure, which

must be acknowledged by the person, written prominently and in bold type, and provided

separately from the disclosures above, stating
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in substantially the following form
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:

"WARNING:
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THIS TECHNOLOGY CAN BE USED TO DEFRAUD YOU. IF SOMEONE

ASKED YOU TO DEPOSIT MONEY IN THIS MACHINE OR IS ON THE PHONE

WITH YOU AND CLAIMS TO BE A FAMILY MEMBER OR FRIEND, A

GOVERNMENT AGENT, A LAW ENFORCEMENT OFFICER, A COMPUTER

SOFTWARE REPRESENTATIVE, A BILL COLLECTOR, OR ANYONE YOU DO NOT

KNOW PERSONALLY, STOP THIS TRANSACTION IMMEDIATELY AND CONTACT

YOUR LOCAL LAW ENFORCEMENT AGENCY AND THE OPERATOR OF THIS

KIOSK. THIS MAY BE A SCAM. NEVER SEND MONEY TO SOMEONE YOU DON'T

KNOW.
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LOSSES DUE TO FRAUDULENT OR ACCIDENTAL TRANSACTIONS ARE

NOT RECOVERABLE AND TRANSACTIONS IN VIRTUAL CURRENCY ARE

IRREVERSIBLE. VIRTUAL CURRENCY TRANSACTIONS MAY BE USED BY

SCAMMERS IMPERSONATING LOVED ONES, THREATENING JAIL TIME, AND

INSISTING YOU WITHDRAW MONEY FROM YOUR BANK ACCOUNT TO

PURCHASE VIRTUAL CURRENCY."

Sec. 7.

Minnesota Statutes 2024, section 53B.75, subdivision 2, is amended to read:

Subd. 2.

Disclosures.

(a) A virtual currency kiosk operator must disclose all relevant

terms and conditions generally associated with the products, services, and activities of the

virtual currency kiosk operator and virtual currency. A virtual currency kiosk operator must

make the disclosures in a clear, conspicuous, and easily readable manner
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in the chosen

language of the user
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. The disclosures under this subdivision must address at least the

following:

(1) the person's liability for unauthorized virtual currency transactions;

(2) the person's right to:

(i) stop payment of a virtual currency transfer and the procedure to stop payment;

(ii) receive a receipt, trade ticket, or other evidence of a transaction at the time of the

transaction; and

(iii) prior notice of a change in the virtual currency kiosk operator's rules or policies;

(3) under what circumstances the virtual currency kiosk operator, without a court or

government order, discloses a person's account information to third parties; and

(4) other disclosures that are customarily provided in connection with opening a person's

account.

(b) Before each virtual currency transaction for, on behalf of, or with a person, a virtual

currency kiosk operator must disclose the transaction's terms and conditions in a clear,

conspicuous, and easily readable manner. The disclosures under this subdivision must

address at least the following:

(1) the amount of the transaction;

(2) any fees, expenses, and charges, including applicable exchange rates;

(3) the type and nature of the transaction;

(4) a warning that once completed, the transaction may not be reversed;

(5) a daily virtual currency transaction limit of no more than
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$2,000
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$1,000
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;

(6) the difference in the
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virtual currency's sale
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price
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of the virtual currency charged to

the user
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compared to the current market price
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of the virtual currency
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; and

(7) other disclosures that are customarily given in connection with a virtual currency

transaction.

Sec. 8.

Minnesota Statutes 2024, section 53B.75, subdivision 3, is amended to read:

Subd. 3.

Acknowledgment of disclosures.

Before completing a transaction, a virtual

currency kiosk operator must ensure that each person who engages in a virtual currency

transaction using the virtual currency operator's kiosk acknowledges receipt of all disclosures

required under this section via confirmation of consent
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at the virtual kiosk
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. Additionally,

upon a transaction's completion, the virtual currency kiosk operator must provide a person

with a physical receipt
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, or
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and, if requested by the user,
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a virtual receipt sent to the person's

email address or SMS number
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, containing
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. The physical or virtual receipt must contain
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the

following information:

(1) the virtual currency kiosk operator's name and contact information, including a

telephone number to answer questions and register complaints;

(2) the type, value, date, and precise time of the transaction, transaction hash, and each

virtual currency address;

(3) the fees charged;

(4) the exchange rate;

(5) a statement of the virtual currency kiosk operator's liability for nondelivery or delayed

delivery;

(6) a statement of the virtual currency kiosk operator's refund policy;
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and
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(7) the contact information for the appropriate division within the Department of

Commerce where the user can report fraud; and

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(7)
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(8)
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any additional information the commissioner of commerce may require.

Sec. 9.

Minnesota Statutes 2024, section 53B.75, is amended by adding a subdivision to

read:

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Subd. 3a.

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Verification of user identity.

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Before accepting payment from a user, a virtual

currency kiosk operator must verify the user's identity for each virtual currency transaction

by obtaining a copy of the user's government-issued identification card. A virtual currency

kiosk operator must also collect the user's name, date of birth, telephone number, mailing

address, and email address. A virtual currency kiosk operator must keep the information

described in this paragraph for five years. A virtual currency kiosk operator must not allow

a user to engage in any transaction at a virtual currency kiosk under any name, account, or

identity other than the user's own.

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Sec. 10.

Minnesota Statutes 2024, section 53B.75, subdivision 4, is amended to read:

Subd. 4.

Refunds
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for new customers
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.

A virtual currency kiosk operator must issue a

refund to a
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new customer
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user
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for the full amount of all transactions
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made within the 72-hour

new customer time period, as described in section
53B.69, subdivision 3b
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,
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including fees

or other charges,
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upon request of the
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customer
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user
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. In order to receive a refund under this

subdivision, a customer must:

(1) have been fraudulently induced to engage in the virtual currency transactions; and

(2) within
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14
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30
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days of the last transaction to occur
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during the 72-hour new customer

time period
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, contact the virtual currency kiosk operator and a government or law enforcement

agency to inform them of the fraudulent nature of the transaction.

Sec. 11.

Minnesota Statutes 2024, section 53B.75, subdivision 5, is amended to read:

Subd. 5.

Transaction limits.

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(a)
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There is an established maximum daily transaction

limit of
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$2,000 for each new customer
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$1,000 for each user
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of a virtual currency kiosk.

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(b) The maximum daily transaction limit of an existing customer shall be decided by

each virtual currency kiosk operator in compliance with federal law.

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Sec. 12.

Minnesota Statutes 2024, section 53B.75, is amended by adding a subdivision to

read:

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Subd. 6.

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Blockchain analytics.

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All virtual currency kiosk operators must use blockchain

analytics and tracing software at the time of a transaction to detect transaction patterns

indicative of fraud or other illicit activities and assist in the prevention of sending virtual

currency to a virtual currency wallet known or likely to be affiliated with fraudulent activity.

Virtual currency kiosk operators must block transactions to virtual currency wallets associated

with overseas exchanges that are not accessible for users. The commissioner may request

that a virtual currency kiosk operator provide evidence demonstrating the virtual currency

kiosk operator's current use of blockchain analytics.

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Sec. 13.

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[53B.76] TRANSACTION FEES.

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A virtual currency kiosk operator is prohibited from directly or indirectly collecting a

fee from a user for a single virtual currency transaction that exceeds three percent of the

United States dollar equivalent of virtual currency.

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Sec. 14.

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[53B.77] VIOLATION.

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A violation of sections 53B.71 to 53B.76 is a violation of section 325F.69.

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Sec. 15.
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REPEALER.
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Minnesota Statutes 2024, section 53B.69, subdivisions 3b and 3c,

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are repealed.

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APPENDIX

Repealed Minnesota Statutes: 26-07258

53B.69 DEFINITIONS.

Subd. 3b.

New customer.

"New customer" means a consumer transacting at a kiosk in Minnesota who has been a customer with a virtual currency kiosk operator for less than 72 hours. After a 72-hour period has elapsed from the day of first signing up as a customer with a virtual currency kiosk operator, the customer will be considered an existing customer and no longer subject to the new customer transaction limit described in section 53B.75, subdivision 5, paragraph (a).

Subd. 3c.

Existing customer.

"Existing customer" means a consumer transacting at a kiosk in Minnesota who has been a customer with a virtual currency kiosk operator for more than a 72-hour period. A new customer will automatically convert to an existing customer after the 72-hour period of first becoming a new customer. An existing customer is subject to the transaction limits described in section 53B.75, subdivision 5, paragraph (b).