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