Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H1089 Compare Versions

Only one version of the bill is available at this time.

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2	2	HOUSE DOCKET, NO. 2648 FILED ON: 1/16/2025
3	3	HOUSE . . . . . . . . . . . . . . . No. 1089
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Bruce J. Ayers
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act providing for regulation and reporting requirements for qualifying virtual currency kiosk
13	13	operators.
14	14	_______________
15	15	PETITION OF:
16	16	NAME:DISTRICT/ADDRESS :DATE ADDED:Bruce J. Ayers1st Norfolk1/16/2025 1 of 12
17	17	HOUSE DOCKET, NO. 2648 FILED ON: 1/16/2025
18	18	HOUSE . . . . . . . . . . . . . . . No. 1089
19	19	By Representative Ayers of Quincy, a petition (accompanied by bill, House, No. 1089) of Bruce
20	20	J. Ayers relative to virtual currency kiosk operators. Financial Services.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Fourth General Court
24	24	(2025-2026)
25	25	_______________
26	26	An Act providing for regulation and reporting requirements for qualifying virtual currency kiosk
27	27	operators.
28	28	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
29	29	of the same, as follows:
30	30	1 SECTION 1 The General Laws are hereby amended by inserting after chapter 169A the
31	31	2following chapter:-
32	32	3 Chapter 169C Regulation of Virtual Currency Kiosk Operators
33	33	4 .
34	34	5 Section 1. The following words and phrases when used in this act shall have the
35	35	6meanings given to them in this section unless the context clearly indicates otherwise:
36	36	7 “Bank Secrecy Act” means the Bank Secrecy Act, 31 U.S.C. 5311, et seq. and its
37	37	8implementing rules and regulations, as amended and recodified from time to time.
38	38	9 “Blockchain.” A distributed digital ledger or database which is chronological, consensus-
39	39	10based, decentralized, and mathematically verified in nature; 2 of 12
40	40	11 “Blockchain analytics.” A software service that uses data from various virtual currencies
41	41	12and their applicable blockchains to provide a risk rating specific to digital wallet addresses from
42	42	13users of virtual currency kiosks.
43	43	14 “Commissioner” The Commissioner of the Massachusetts Division of Banks.
44	44	15 “Digital wallet.” Hardware or software that enables individuals to store and use virtual
45	45	16currency.
46	46	17 “Digital wallet address.” An alphanumeric identifier representing a destination on a
47	47	18blockchain for a virtual currency transfer that is associated with a digital wallet.
48	48	19 “Division” The Massachusetts Division of Banks.
49	49	20 “Federal Deposit Insurance Corporation or Securities Investor Protection Corporation.” A
50	50	21bank, credit union, savings and loan association, trust company, savings association, savings
51	51	22bank, industrial bank, or industrial loan company organized under the laws of the United States
52	52	23or any state of the United States, if the bank, credit union, savings and loan association, trust
53	53	24company, savings association, savings bank, industrial bank, or industrial loan company has
54	54	25federally insured deposits.
55	55	26 “Fiat currency.” A medium of exchange that is authorized or adopted by the United
56	56	27States government as part of its currency and is not backed by a commodity.
57	57	28 “Individual.” A natural person.
58	58	29 "NMLS." The Nationwide Multistate Licensing System and Registry developed by the
59	59	30Conference of State Bank Supervisors and the American Association of Residential Mortgage 3 of 12
60	60	31Regulators and owned and operated by the State Regulatory Registry, LLC, or any successor or
61	61	32affiliated entity, for the licensing and registration of persons in financial services industries.
62	62	33 “United States PATRIOT Act.” The Uniting and Strengthening America by Providing
63	63	34Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and its
64	64	35implementing rules and regulations, as amended and recodified from time to time.
65	65	36 “Secretary.” The Secretary of the Illinois Department of Financial and Professional
66	66	37Responsibility, the acting Secretary of the Illinois Department of Financial and Professional
67	67	38Responsibility, or a person authorized by the Illinois Department of Financial and Professional
68	68	39Responsibility.
69	69	40 “Virtual currency.” Any type of digital unit that is used as a medium of exchange or a
70	70	41form of digitally stored value or that is incorporated into payment system technology. Virtual
71	71	42currency shall be construed to include digital units of exchange that (A) have a centralized
72	72	43repository or administrator; (B) are decentralized and have no centralized repository or
73	73	44administrator; or (C) may be created or obtained by computing or manufacturing effort. Virtual
74	74	45currency shall not be construed to include digital units that are used (i) solely within online
75	75	46gaming platforms with no market or application outside such gaming platforms, or (ii)
76	76	47exclusively as part of a consumer affinity or rewards program, and can be applied solely as
77	77	48payment for purchases with the issuer or other designated merchants, but cannot be converted
78	78	49into or redeemed for fiat currency.
79	79	50 “Virtual currency kiosk.” An electronic terminal of the virtual currency kiosk operator
80	80	51that enables the owner or operator to facilitate the exchange of fiat currency for virtual currency
81	81	52or virtual currency for fiat currency or other virtual currency, including, but not limited to, (A) 4 of 12
82	82	53connecting directly to a separate virtual currency exchange that performs the actual virtual
83	83	54currency transmission, or (B) drawing upon the virtual currency in the possession of the owner or
84	84	55operator of the electronic terminal.
85	85	56 “Virtual currency kiosk operator.” A corporation, limited liability company, limited
86	86	57liability partnership, or foreign entity qualified to do business in the State of Illinois which
87	87	58operates a virtual currency kiosk within the State of Illinois.
88	88	59
89	89	60 Section 2. (1) Except as otherwise provided in this Section, all information or reports
90	90	61obtained by the Department from a virtual currency kiosk operator, and all information contained
91	91	62in or related to an examination, investigation, operating report, or condition report prepared by,
92	92	63on behalf of, or for the use of the Department, are confidential and are not subject to disclosure
93	93	64under the Freedom of Information Act.
94	94	65 (2) Information contained in the records of the Department that is not confidential and
95	95	66may be available to the public either on the Department’s website, upon receipt by the
96	96	67Department of a written request, or in NMLS shall include:
97	97	68 (a) the name, business address, telephone number, and unique identifier of a virtual
98	98	69currency kiosk operator;
99	99	70 (b) the business address of a virtual currency kiosk operator’s registered agent for
100	100	71service; and
101	101	72 (c) copies of any final orders of the Department relating to any violation of this
102	102	73Act or regulations implementing this Act. 5 of 12
103	103	74 Section 3. If anything in this Act is inconsistent with Federal law, including but not
104	104	75limited to the Bank Secrecy Act or the United States PATRIOT Act, the applicable Federal law
105	105	76shall govern to the extent of any inconsistency.
106	106	77
107	107	78 Section 4. (1) The Secretary may request evidence of compliance with this Act or a rule
108	108	79adopted or order issued under this Act as reasonably necessary or appropriate to administer and
109	109	80enforce this Act, and other applicable law, including the Bank Secrecy Act and the USA
110	110	81PATRIOT Act.
111	111	82 (2) A virtual currency kiosk operator shall provide the Commissioner all records the
112	112	83Commissioner may reasonably require to ensure compliance with this Act.
113	113	84
114	114	85 Section 5. As part of establishing a relationship with a customer, and prior to entering
115	115	86into an initial transaction for, on behalf of, or with such customer, each virtual currency kiosk
116	116	87operator shall disclose in clear, conspicuous, and legible writing in the English language,
117	117	88whether in accessible terms of service or elsewhere, all material risks associated with its
118	118	89products, services, and activities and virtual currency generally, including disclosures
119	119	90substantially similar to the following:
120	120	91 (1) virtual currency is not legal tender, is not backed by the government, and accounts
121	121	92and value balances are not subject to Federal Deposit Insurance Corporation or Securities
122	122	93Investor Protection Corporation protections; 6 of 12
123	123	94 (2) legislative and regulatory changes or actions at the State, Federal, or international
124	124	95level may adversely affect the use, transfer, exchange, and value of virtual currency;
125	125	96 (3) transactions in virtual currency may be irreversible, and, accordingly, losses due to
126	126	97fraudulent or accidental transactions may not be recoverable;
127	127	98 (4) some virtual currency transactions shall be deemed to be made when recorded on a
128	128	99public ledger, which is not necessarily the date or time that the customer initiates the transaction;
129	129	100 (5) the value of virtual currency may be derived from the continued willingness of market
130	130	101participants to exchange fiat currency for virtual currency, which may result in the potential for
131	131	102permanent and total loss of value of a particular virtual currency should the market for that
132	132	103virtual currency disappear;
133	133	104 (6) there is no assurance that a person who accepts a virtual currency as payment today
134	134	105will continue to do so in the future;
135	135	106 (7) the volatility and unpredictability of the price of virtual currency relative to fiat
136	136	107currency may result in significant loss over a short period of time;
137	137	108 (8) the nature of virtual currency may lead to an increased risk of fraud or cyber-attack;
138	138	109 (9) the nature of virtual currency means that any technological difficulties experienced by
139	139	110the virtual currency kiosk operator may prevent the access or use of a customer’s virtual
140	140	111currency; and
141	141	112 (10) any bond or trust account maintained by the virtual currency kiosk operator for the
142	142	113benefit of its customers may not be sufficient to cover all losses incurred by customers. 7 of 12
143	143	114 Section 6. When opening an account for a new customer, and prior to entering into an
144	144	115initial transaction for, on behalf of, or with such customer, each virtual currency kiosk operator
145	145	116shall disclose in clear, conspicuous, and legible writing in the English language, whether in
146	146	117accessible terms of service or elsewhere, all relevant terms and conditions associated with its
147	147	118products, services, and activities and virtual currency generally, including disclosures
148	148	119substantially similar to the following:
149	149	120 (1) the customer’s liability for unauthorized virtual currency transactions;
150	150	121 (2) under what circumstances the virtual currency kiosk operator will, absent a court or
151	151	122government order, disclose information concerning the customer’s account to third parties;
152	152	123 (3) the customer’s right to receive periodic account statements and valuations from the
153	153	124virtual currency kiosk operator;
154	154	125 (4) the customer’s right to receive a receipt, trade ticket, or other evidence of a
155	155	126transaction;
156	156	127 (5) the customer’s right to prior notice of a change in the virtual currency kiosk
157	157	128operator’s rules or policies; and
158	158	129 (6) such other disclosures as are customarily given in connection with the opening of
159	159	130customer accounts.
160	160	131 Section 7. Prior to entering into a virtual currency transaction with a customer, each
161	161	132virtual currency kiosk operator shall ensure a warning is disclosed to a customer substantially
162	162	133similar to the following:
163	163	134 Customer Notice. Please Read Carefully. 8 of 12
164	164	135 Did you receive a phone call from your bank, software provider, the police, or were you
165	165	136directed to make a payment for social security, utility bill, investment, warrants, or bail money at
166	166	137this kiosk? STOP
167	167	138 Is anyone on the phone pressuring you to make a payment of any kind? STOP
168	168	139 I understand that the purchase and sale of cryptocurrency is a final irreversible and non-
169	169	140refundable transaction.
170	170	141 I confirm I am sending funds to a wallet I own or directly have control over. I confirm
171	171	142that I am using funds gained from my own initiative to make my transaction.
172	172	143
173	173	144 Section 8. Upon completion of any virtual currency kiosk transaction, each virtual
174	174	145currency kiosk operator shall provide to a customer a digital or physical receipt containing the
175	175	146following information:
176	176	147 (a)the name and contact information of the virtual currency kiosk operator, including
177	177	148a telephone number established by the virtual currency kiosk operator to answer questions and
178	178	149register complaints;
179	179	150 (b)the type, value, date, and precise time of the transaction in the local time zone;
180	180	151 (c)the fee charged;
181	181	152 (d)the exchange rate, if applicable;
182	182	153 (e)a statement of the liability of the virtual currency kiosk operator for non-delivery
183	183	154or delayed delivery; and 9 of 12
184	184	155 (f)a statement of the refund policy of the virtual currency kiosk operator.
185	185	156 Section 9. All virtual currency kiosk operators must use blockchain analytics software to
186	186	157assist in the prevention of sending purchased virtual currency from a virtual currency kiosk
187	187	158operator to a digital wallet known to be affiliated with fraudulent activity at the time of a
188	188	159transaction. The Department may request evidence from any virtual currency kiosk operator of
189	189	160current use of blockchain analytics.
190	190	161 Section 10. All virtual currency kiosk operators performing business in the
191	191	162Commonwealth of Massachusetts must provide live customer service at a minimum on Monday
192	192	163through Friday between 8AM EST and 10PM CST. The customer service toll free number must
193	193	164be displayed on the virtual currency kiosk or the virtual currency kiosk screens.
194	194	165 Section 11. All virtual currency kiosk operators shall take reasonable steps to detect and
195	195	166prevent fraud, including establishing and maintaining a written anti-fraud policy. The anti-fraud
196	196	167policy shall, at a minimum, include:
197	197	168 (1)the identification and assessment of fraud related risk areas;
198	198	169 (2)procedures and controls to protect against identified risks;
199	199	170 (3)allocation of responsibility for monitoring risks; and
200	200	171 (4)procedures for the periodic evaluation and revision of the anti-fraud procedures,
201	201	172controls, and monitoring mechanisms.
202	202	173 Section 12. (1) Each virtual currency kiosk operator shall maintain, implement, and
203	203	174enforce a written Enhanced Due Diligence Policy. Such a policy must be reviewed and approved 10 of 12
204	204	175by the virtual currency kiosk operator’s board of directors or an equivalent governing body of the
205	205	176virtual currency kiosk operator.
206	206	177 (2) The Enhanced Due Diligence Policy shall identify at minimum individuals who are at
207	207	178risk of fraud based on age or mental capacity.
208	208	179 Section 13. (1) Each virtual currency kiosk operator is required to comply with the
209	209	180provisions of this Act, any lawful order, rule, or regulation made or issued under the provisions
210	210	181of this Act, and all applicable Federal and State laws, rules, and regulations.
211	211	182 (2) Each virtual currency kiosk shall maintain, implement, and enforce written
212	212	183compliance policies and procedures. Such policies and procedures must be reviewed and
213	213	184approved by the virtual currency kiosk operator’s board of directors or an equivalent governing
214	214	185body of the virtual currency kiosk operator.
215	215	186 Section 14. (1) Each virtual currency kiosk operator must designate and employ a
216	216	187compliance officer with the following requirements:
217	217	188 (a) the individual must be qualified to coordinate and monitor compliance with this Act
218	218	189and all other applicable Federal and State laws, rules, and regulations;
219	219	190 (b) the individual must be employed full-time by the virtual currency kiosk operator; and
220	220	191 (c) the designated compliance officer cannot be any individual who owns more than 20%
221	221	192of the virtual currency kiosk operator by whom the individual is employed.
222	222	193 (2) Compliance responsibilities required under Federal and State laws, rules, and
223	223	194regulations shall be completed by full-time employees of the virtual currency kiosk operator. 11 of 12
224	224	195
225	225	196 Section 15. (1) Each virtual currency kiosk operator must designate and employ a
226	226	197consumer protection officer with each of the following requirements:
227	227	198 (a) the individual must be qualified to coordinate and monitor compliance with this Act
228	228	199and all other applicable Federal and State laws, rules, and regulations;
229	229	200 (b) the individual must be employed full-time by the virtual currency kiosk operators; and
230	230	201 (c) the designated consumer protection officer cannot be an individual who owns more
231	231	202than 20% of the virtual currency kiosk operator by whom the individual is employed.
232	232	203
233	233	204 Section 16. (1) Each virtual currency kiosk operator shall submit a report of the location
234	234	205of each virtual currency kiosk located within the Commonwealth of Massachusetts within 45
235	235	206days of the end of the calendar quarter. The Commissioner shall formulate a system for virtual
236	236	207currency kiosk operators to submit such locations that is consistent with the requirements of this
237	237	208Section.
238	238	209 (2) The location report shall include, at a minimum, the following regarding the location
239	239	210where a virtual currency kiosk is located:
240	240	211 (a) company legal name;
241	241	212 (b) any fictitious or trade name;
242	242	213 (c) physical address; 12 of 12
243	243	214 (d) start date of operation of virtual currency kiosk at location; and
244	244	215 (e) end date of operate of virtual currency kiosk at location, if applicable;
245	245	216
246	246	217 Section 17. (1) Any virtual currency kiosk operator who owns, operates, solicits,
247	247	218markets, advertises, or facilitates virtual currency kiosks in this state shall be deemed to be
248	248	219engaged in money transmission and require licensure pursuant to this Act.
249	249	220 (2) All unlicensed virtual currency kiosk operators must apply for a money transmitter
250	250	221license within 60 days after this Act goes into effect. Virtual currency kiosk operators who apply
251	251	222within this time will be allowed to continue operations while the Commonwealth reviews their
252	252	223application. Any virtual currency kiosk operators whose application is denied by the
253	253	224Commonwealth of Massachusetts will have to cease operations until they are granted a money
254	254	225transmitter license.