Massachusetts 2025-2026 Regular Session

Massachusetts Senate Bill S804 Compare Versions

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

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2	2	SENATE DOCKET, NO. 2006 FILED ON: 1/17/2025
3	3	SENATE . . . . . . . . . . . . . . No. 804
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Patrick M. O'Connor
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 :Patrick M. O'ConnorFirst Plymouth and NorfolkJoanne M. ComerfordHampshire, Franklin and Worcester1/31/2025 1 of 12
17	17	SENATE DOCKET, NO. 2006 FILED ON: 1/17/2025
18	18	SENATE . . . . . . . . . . . . . . No. 804
19	19	By Mr. O'Connor, a petition (accompanied by bill, Senate, No. 804) of Patrick M. O'Connor and
20	20	Joanne M. Comerford for legislation to provide regulation and reporting requirements for
21	21	qualifying virtual currency kiosk operators. Financial Services.
22	22	The Commonwealth of Massachusetts
23	23	_______________
24	24	In the One Hundred and Ninety-Fourth General Court
25	25	(2025-2026)
26	26	_______________
27	27	An Act providing for regulation and reporting requirements for qualifying virtual currency kiosk
28	28	operators.
29	29	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
30	30	of the same, as follows:
31	31	1 SECTION 1 The General Laws are hereby amended by inserting after chapter 169A the
32	32	2following chapter:-
33	33	3 Chapter 169C Regulation of Virtual Currency Kiosk Operators
34	34	4 SECTION 1. The following words and phrases when used in this act shall have the
35	35	5meanings given to them in this section unless the context clearly indicates otherwise:
36	36	6 “Bank Secrecy Act” means the Bank Secrecy Act, 31 U.S.C. 5311, et seq. and its
37	37	7implementing rules and regulations, as amended and recodified from time to time.
38	38	8 “Blockchain.” A distributed digital ledger or database which is chronological, consensus-
39	39	9based, decentralized, and mathematically verified in nature; 2 of 12
40	40	10 “Blockchain analytics.” A software service that uses data from various virtual currencies
41	41	11and their applicable blockchains to provide a risk rating specific to digital wallet addresses from
42	42	12users of virtual currency kiosks.
43	43	13 “Commissioner” The Commissioner of the Massachusetts Division of Banks.
44	44	14 “Digital wallet.” Hardware or software that enables individuals to store and use virtual
45	45	15currency.
46	46	16 “Digital wallet address.” An alphanumeric identifier representing a destination on a
47	47	17blockchain for a virtual currency transfer that is associated with a digital wallet.
48	48	18 “Division” The Massachusetts Division of Banks.
49	49	19 “Federal Deposit Insurance Corporation or Securities Investor Protection Corporation.” A
50	50	20bank, credit union, savings and loan association, trust company, savings association, savings
51	51	21bank, industrial bank, or industrial loan company organized under the laws of the United States
52	52	22or any state of the United States, if the bank, credit union, savings and loan association, trust
53	53	23company, savings association, savings bank, industrial bank, or industrial loan company has
54	54	24federally insured deposits.
55	55	25 “Fiat currency.” A medium of exchange that is authorized or adopted by the United
56	56	26States government as part of its currency and is not backed by a commodity.
57	57	27 “Individual.” A natural person.
58	58	28 "NMLS." The Nationwide Multistate Licensing System and Registry developed by the
59	59	29Conference of State Bank Supervisors and the American Association of Residential Mortgage 3 of 12
60	60	30Regulators and owned and operated by the State Regulatory Registry, LLC, or any successor or
61	61	31affiliated entity, for the licensing and registration of persons in financial services industries.
62	62	32 “United States PATRIOT Act.” The Uniting and Strengthening America by Providing
63	63	33Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and its
64	64	34implementing rules and regulations, as amended and recodified from time to time.
65	65	35 “Secretary.” The Secretary of the Illinois Department of Financial and Professional
66	66	36Responsibility, the acting Secretary of the Illinois Department of Financial and Professional
67	67	37Responsibility, or a person authorized by the Illinois Department of Financial and Professional
68	68	38Responsibility.
69	69	39 “Virtual currency.” Any type of digital unit that is used as a medium of exchange or a
70	70	40form of digitally stored value or that is incorporated into payment system technology. Virtual
71	71	41currency shall be construed to include digital units of exchange that (A) have a centralized
72	72	42repository or administrator; (B) are decentralized and have no centralized repository or
73	73	43administrator; or (C) may be created or obtained by computing or manufacturing effort. Virtual
74	74	44currency shall not be construed to include digital units that are used (i) solely within online
75	75	45gaming platforms with no market or application outside such gaming platforms, or (ii)
76	76	46exclusively as part of a consumer affinity or rewards program, and can be applied solely as
77	77	47payment for purchases with the issuer or other designated merchants, but cannot be converted
78	78	48into or redeemed for fiat currency.
79	79	49 “Virtual currency kiosk.” An electronic terminal of the virtual currency kiosk operator
80	80	50that enables the owner or operator to facilitate the exchange of fiat currency for virtual currency
81	81	51or virtual currency for fiat currency or other virtual currency, including, but not limited to, (A) 4 of 12
82	82	52connecting directly to a separate virtual currency exchange that performs the actual virtual
83	83	53currency transmission, or (B) drawing upon the virtual currency in the possession of the owner or
84	84	54operator of the electronic terminal.
85	85	55 “Virtual currency kiosk operator.” A corporation, limited liability company, limited
86	86	56liability partnership, or foreign entity qualified to do business in the State of Illinois which
87	87	57operates a virtual currency kiosk within the State of Illinois.
88	88	58 SECTION 2. (1) Except as otherwise provided in this Section, all information or reports
89	89	59obtained by the Department from a virtual currency kiosk operator, and all information contained
90	90	60in or related to an examination, investigation, operating report, or condition report prepared by,
91	91	61on behalf of, or for the use of the Department, are confidential and are not subject to disclosure
92	92	62under the Freedom of Information Act.
93	93	63 (2) Information contained in the records of the Department that is not confidential and
94	94	64may be available to the public either on the Department’s website, upon receipt by the
95	95	65Department of a written request, or in NMLS shall include:
96	96	66 (a) the name, business address, telephone number, and unique identifier of a virtual
97	97	67currency kiosk operator;
98	98	68 (b) the business address of a virtual currency kiosk operator’s registered agent for
99	99	69service; and
100	100	70 (c) copies of any final orders of the Department relating to any violation of this Act or
101	101	71regulations implementing this Act. 5 of 12
102	102	72 SECTION 3. If anything in this Act is inconsistent with Federal law, including but not
103	103	73limited to the Bank Secrecy Act or the United States PATRIOT Act, the applicable Federal law
104	104	74shall govern to the extent of any inconsistency.
105	105	75 SECTION 4. (1) The Secretary may request evidence of compliance with this Act or a
106	106	76rule adopted or order issued under this Act as reasonably necessary or appropriate to administer
107	107	77and enforce this Act, and other applicable law, including the Bank Secrecy Act and the USA
108	108	78PATRIOT Act.
109	109	79 (2) A virtual currency kiosk operator shall provide the Commissioner all records the
110	110	80Commissioner may reasonably require to ensure compliance with this Act.
111	111	81 SECTION 5. As part of establishing a relationship with a customer, and prior to entering
112	112	82into an initial transaction for, on behalf of, or with such customer, each virtual currency kiosk
113	113	83operator shall disclose in clear, conspicuous, and legible writing in the English language,
114	114	84whether in accessible terms of service or elsewhere, all material risks associated with its
115	115	85products, services, and activities and virtual currency generally, including disclosures
116	116	86substantially similar to the following:
117	117	87 (1) virtual currency is not legal tender, is not backed by the government, and accounts
118	118	88and value balances are not subject to Federal Deposit Insurance Corporation or Securities
119	119	89Investor Protection Corporation protections;
120	120	90 (2) legislative and regulatory changes or actions at the State, Federal, or international
121	121	91level may adversely affect the use, transfer, exchange, and value of virtual currency; 6 of 12
122	122	92 (3) transactions in virtual currency may be irreversible, and, accordingly, losses due to
123	123	93fraudulent or accidental transactions may not be recoverable;
124	124	94 (4) some virtual currency transactions shall be deemed to be made when recorded on a
125	125	95public ledger, which is not necessarily the date or time that the customer initiates the transaction;
126	126	96 (5) the value of virtual currency may be derived from the continued willingness of market
127	127	97participants to exchange fiat currency for virtual currency, which may result in the potential for
128	128	98permanent and total loss of value of a particular virtual currency should the market for that
129	129	99virtual currency disappear;
130	130	100 (6) there is no assurance that a person who accepts a virtual currency as payment today
131	131	101will continue to do so in the future;
132	132	102 (7) the volatility and unpredictability of the price of virtual currency relative to fiat
133	133	103currency may result in significant loss over a short period of time;
134	134	104 (8) the nature of virtual currency may lead to an increased risk of fraud or cyber-attack;
135	135	105 (9) the nature of virtual currency means that any technological difficulties experienced by
136	136	106the virtual currency kiosk operator may prevent the access or use of a customer’s virtual
137	137	107currency; and
138	138	108 (10) any bond or trust account maintained by the virtual currency kiosk operator for the
139	139	109benefit of its customers may not be sufficient to cover all losses incurred by customers.
140	140	110 SECTION 6. When opening an account for a new customer, and prior to entering into an
141	141	111initial transaction for, on behalf of, or with such customer, each virtual currency kiosk operator
142	142	112shall disclose in clear, conspicuous, and legible writing in the English language, whether in 7 of 12
143	143	113accessible terms of service or elsewhere, all relevant terms and conditions associated with its
144	144	114products, services, and activities and virtual currency generally, including disclosures
145	145	115substantially similar to the following:
146	146	116 (1) the customer’s liability for unauthorized virtual currency transactions;
147	147	117 (2) under what circumstances the virtual currency kiosk operator will, absent a court or
148	148	118government order, disclose information concerning the customer’s account to third parties;
149	149	119 (3) the customer’s right to receive periodic account statements and valuations from the
150	150	120virtual currency kiosk operator;
151	151	121 (4) the customer’s right to receive a receipt, trade ticket, or other evidence of a
152	152	122transaction;
153	153	123 (5) the customer’s right to prior notice of a change in the virtual currency kiosk
154	154	124operator’s rules or policies; and
155	155	125 (6) such other disclosures as are customarily given in connection with the opening of
156	156	126customer accounts.
157	157	127 SECTION 7. Prior to entering into a virtual currency transaction with a customer, each
158	158	128virtual currency kiosk operator shall ensure a warning is disclosed to a customer substantially
159	159	129similar to the following:
160	160	130 Customer Notice. Please Read Carefully. 8 of 12
161	161	131 Did you receive a phone call from your bank, software provider, the police, or were you
162	162	132directed to make a payment for social security, utility bill, investment, warrants, or bail money at
163	163	133this kiosk? STOP
164	164	134 Is anyone on the phone pressuring you to make a payment of any kind? STOP
165	165	135 I understand that the purchase and sale of cryptocurrency is a final irreversible and non-
166	166	136refundable transaction.
167	167	137 I confirm I am sending funds to a wallet I own or directly have control over. I confirm
168	168	138that I am using funds gained from my own initiative to make my transaction.
169	169	139 SECTION 8. Upon completion of any virtual currency kiosk transaction, each virtual
170	170	140currency kiosk operator shall provide to a customer a digital or physical receipt containing the
171	171	141following information:
172	172	142 (a)the name and contact information of the virtual currency kiosk operator, including
173	173	143a telephone number established by the virtual currency kiosk operator to answer questions and
174	174	144register complaints;
175	175	145 (b)the type, value, date, and precise time of the transaction in the local time zone;
176	176	146 (c)the fee charged;
177	177	147 (d)the exchange rate, if applicable;
178	178	148 (e)a statement of the liability of the virtual currency kiosk operator for non-delivery
179	179	149or delayed delivery; and
180	180	150 (f)a statement of the refund policy of the virtual currency kiosk operator. 9 of 12
181	181	151 SECTION 9. All virtual currency kiosk operators must use blockchain analytics software
182	182	152to assist in the prevention of sending purchased virtual currency from a virtual currency kiosk
183	183	153operator to a digital wallet known to be affiliated with fraudulent activity at the time of a
184	184	154transaction. The Department may request evidence from any virtual currency kiosk operator of
185	185	155current use of blockchain analytics.
186	186	156 SECTION 10. All virtual currency kiosk operators performing business in the
187	187	157Commonwealth of Massachusetts must provide live customer service at a minimum on Monday
188	188	158through Friday between 8AM EST and 10PM CST. The customer service toll free number must
189	189	159be displayed on the virtual currency kiosk or the virtual currency kiosk screens.
190	190	160 SECTION 11. All virtual currency kiosk operators shall take reasonable steps to detect
191	191	161and prevent fraud, including establishing and maintaining a written anti-fraud policy. The anti-
192	192	162fraud policy shall, at a minimum, include:
193	193	163 (1)the identification and assessment of fraud related risk areas;
194	194	164 (2)procedures and controls to protect against identified risks;
195	195	165 (3)allocation of responsibility for monitoring risks; and
196	196	166 (4)procedures for the periodic evaluation and revision of the anti-fraud procedures,
197	197	167controls, and monitoring mechanisms.
198	198	168 SECTION 12. (1) Each virtual currency kiosk operator shall maintain, implement, and
199	199	169enforce a written Enhanced Due Diligence Policy. Such a policy must be reviewed and approved
200	200	170by the virtual currency kiosk operator’s board of directors or an equivalent governing body of the
201	201	171virtual currency kiosk operator. 10 of 12
202	202	172 (2) The Enhanced Due Diligence Policy shall identify at minimum individuals who are at
203	203	173risk of fraud based on age or mental capacity.
204	204	174 SECTION 13. (1) Each virtual currency kiosk operator is required to comply with the
205	205	175provisions of this Act, any lawful order, rule, or regulation made or issued under the provisions
206	206	176of this Act, and all applicable Federal and State laws, rules, and regulations.
207	207	177 (2) Each virtual currency kiosk shall maintain, implement, and enforce written
208	208	178compliance policies and procedures. Such policies and procedures must be reviewed and
209	209	179approved by the virtual currency kiosk operator’s board of directors or an equivalent governing
210	210	180body of the virtual currency kiosk operator.
211	211	181 SECTION 14. (1) Each virtual currency kiosk operator must designate and employ a
212	212	182compliance officer with the following requirements:
213	213	183 (a) the individual must be qualified to coordinate and monitor compliance with this Act
214	214	184and all other applicable Federal and State laws, rules, and regulations;
215	215	185 (b) the individual must be employed full-time by the virtual currency kiosk operator; and
216	216	186 (c) the designated compliance officer cannot be any individual who owns more than 20%
217	217	187of the virtual currency kiosk operator by whom the individual is employed.
218	218	188 (2) Compliance responsibilities required under Federal and State laws, rules, and
219	219	189regulations shall be completed by full-time employees of the virtual currency kiosk operator.
220	220	190 SECTION 15. (1) Each virtual currency kiosk operator must designate and employ a
221	221	191consumer protection officer with each of the following requirements: 11 of 12
222	222	192 (a) the individual must be qualified to coordinate and monitor compliance with this Act
223	223	193and all other applicable Federal and State laws, rules, and regulations;
224	224	194 (b) the individual must be employed full-time by the virtual currency kiosk operators; and
225	225	195 (c) the designated consumer protection officer cannot be an individual who owns more
226	226	196than 20% of the virtual currency kiosk operator by whom the individual is employed.
227	227	197 SECTION 16. (1) Each virtual currency kiosk operator shall submit a report of the
228	228	198location of each virtual currency kiosk located within the Commonwealth of Massachusetts
229	229	199within 45 days of the end of the calendar quarter. The Commissioner shall formulate a system
230	230	200for virtual currency kiosk operators to submit such locations that is consistent with the
231	231	201requirements of this Section.
232	232	202 (2) The location report shall include, at a minimum, the following regarding the location
233	233	203where a virtual currency kiosk is located:
234	234	204 (a) company legal name;
235	235	205 (b) any fictitious or trade name;
236	236	206 (c) physical address;
237	237	207 (d) start date of operation of virtual currency kiosk at location; and
238	238	208 (e) end date of operate of virtual currency kiosk at location, if applicable;
239	239	209 SECTION 17. (1) Any virtual currency kiosk operator who owns, operates, solicits,
240	240	210markets, advertises, or facilitates virtual currency kiosks in this state shall be deemed to be
241	241	211engaged in money transmission and require licensure pursuant to this Act. 12 of 12
242	242	212 (2) All unlicensed virtual currency kiosk operators must apply for a money transmitter
243	243	213license within 60 days after this Act goes into effect. Virtual currency kiosk operators who apply
244	244	214within this time will be allowed to continue operations while the Commonwealth reviews their
245	245	215application. Any virtual currency kiosk operators whose application is denied by the
246	246	216Commonwealth of Massachusetts will have to cease operations until they are granted a money
247	247	217transmitter license.