25.1011.03000
Sixty-ninth
Legislative Assembly
of North Dakota
Introduced by
Representatives Swiontek, Christy, Hanson, Heinert, Schauer, J. Olson, Richter
Senators Hogan, Klein, Lee, Rummel, Sickler
A BILL for an Act to create and enact sections 13-09.1-50, 13-09.1-51, 13-09.1-52, 13-09.1-53,
and 13-09.1-54 of the North Dakota Century Code, relating to virtual-currency kiosks; and to
amend and reenact section 13-09.1-44 of the North Dakota Century Code, relating to virtual-
currency kiosks.
BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
SECTION 1. AMENDMENT. Section 13-09.1-44 of the North Dakota Century Code is
amended and reenacted as follows:
13-09.1-44. Definitions.
For the purposes of sections 13-09.1-44 through 13-09.1-4913 - 09.1 - 54 , the following
definitions apply:
1."Blockchain analytics" means the analysis of data from blockchains or publicly
distributed ledgers, including associated transaction information to provide risk-specific
information about virtual - currency transactions and virtual currency addresses.
2."Control of virtual currency", when used in reference to a transaction or relationship
involving virtual currency, means the power to execute unilaterally or prevent
indefinitely a virtual-currency transaction.
2.3."Exchange", used as a verb, means to assume control of virtual currency from or on
behalf of a person, at least momentarily, to sell, trade, or convert:
a.Virtual currency for money, bank credit, or one or more forms of virtual currency;
or
b.Money or bank credit for one or more forms of virtual currency.
Page No. 1 25.1011.03000
ENGROSSED HOUSE BILL NO. 1447
FIRST ENGROSSMENT
with Senate Amendments
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21 Sixty-ninth
Legislative Assembly
4."Transaction hash" means a unique identifier made up of a string of characters that act
as a record and provide proof the transaction was verified and added to the
blockchain.
3.5."Transfer" means to assume control of virtual currency from or on behalf of a person
and to:
a.Credit the virtual currency to the account of another person;
b.Move the virtual currency from one account of a person to another account of the
same person; or
c.Relinquish control of virtual currency to another person.
4.6."United States dollar equivalent of virtual currency" means the equivalent value of a
particular virtual currency in United States dollars shown on a virtual-currency
exchange based in the United States for a particular date or period specified in this
chapter.
5.7."Virtual currency":
a.Means a digital representation of value that:
(1)Is used as a medium of exchange, unit of account, or store of value; and
(2)Is not money, whether or not denominated in money; and
b.Does not include:
(1)A transaction in which a merchant grants, as part of an affinity or rewards
program, value that cannot be taken from or exchanged with the merchant
for money, bank credit, or virtual currency; or
(2)A digital representation of value issued by or on behalf of a publisher and
used solely within an online game, game platform, or family of games sold
by the same publisher or offered on the same game platform.
8."Virtual - currency address" means an alphanumeric identifier associated with a
virtual - currency wallet identifying the location to which a virtual - currency transaction
may be sent.
6.9."Virtual-currency administration" means issuing virtual currency with the authority to
redeem the currency for money, bank credit, or other virtual currency.
7.10."Virtual-currency business activity" means:
Page No. 2 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30 Sixty-ninth
Legislative Assembly
a.Exchanging, transferring, or storing virtual currency or engaging in virtual-
currency administration, whether directly or through an agreement with a virtual-
currency control-services vendor;
b.Holding electronic precious metals or electronic certificates representing interests
in precious metals on behalf of another person or issuing shares or electronic
certificates representing interests in precious metals; or
c.Exchanging one or more digital representations of value used within one or more
online games, game platforms, or family of games for:
(1)Virtual currency offered by or on behalf of the same publisher from which
the original digital representation of value was received; or
(2)Money or bank credit outside the online game, game platform, or family of
games offered by or on behalf of the same publisher from which the original
digital representation of value was received.
8.11."Virtual-currency control-services vendor" means a person that has control of virtual
currency solely under an agreement with a person that, on behalf of another person,
assumes control of virtual currency.
12."Virtual - currency kiosk" means an electronic terminal acting 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 by:
a.Connecting directly to a separate virtual - currency exchange that performs the
actual virtual-currency transmission; or
b.Drawing upon the virtual currency in the possession of the electronic terminal's
operator.
13."Virtual - currency kiosk operator" means a person that operates a virtual currency kiosk
in this state.
14."Virtual - currency kiosk transaction" means:
a.A transaction conducted or performed, in whole or in part, by electronic means
via a virtual - currency kiosk.
b.A transaction made at a virtual - currency kiosk to purchase virtual currency with
fiat currency or to sell virtual currency for fiat currency.
Page No. 3 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31 Sixty-ninth
Legislative Assembly
15."Virtual - currency wallet" means a software application or other mechanism providing a
means to hold, store, or transfer virtual currency.
SECTION 2. Section 13-09.1-50 of the North Dakota Century Code is created and enacted
as follows:
13 - 09.1 - 50. Virtual - currency kiosks.
1.A kiosk operator may not engage in virtual-currency business activity or hold itself out
as being able to engage in virtual-currency business activity with or on behalf of
another person unless the kiosk operator is licensed in this state as a money
transmitter.
2.A virtual - currency kiosk operator shall comply with all requirements of a money
transmitter under this chapter.
3.A virtual - currency kiosk operator may not locate, or allow a third party to locate, a
virtual - currency kiosk in this state unless the virtual - currency kiosk:
a.Is placed in a commercially accessible area;
b.Is accessible to users with sufficient space to account for mobility limitations of
users; and
c.Is subject to security features, including sufficient lighting and surveillance.
4.Each virtual - currency kiosk operator shall submit a quarterly report of the location of
each virtual - currency kiosk located within the state to the commissioner within
forty - five days of the end of the calendar quarter. The location report must include:
a.The company's legal name;
b.Any fictitious or trade name;
c.The physical address;
d.The start date of operation of the virtual - currency kiosk at the location;
e.The end date of operation of the virtual - currency kiosk at the location, if
applicable; and
f.The virtual - currency addresses associated with the virtual - currency kiosk.
SECTION 3. Section 13-09.1-51 of the North Dakota Century Code is created and enacted
as follows:
Page No. 4 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29 Sixty-ninth
Legislative Assembly
13 - 09.1 - 51. Disclosures.
1.A virtual - currency kiosk operator shall disclose in a clear, conspicuous, and easily
readable manner in the chosen language of the customer, all relevant terms and
conditions generally associated with the products, services, and activities of the
virtual - currency kiosk operator and virtual currency.
2.The virtual - currency kiosk operator must receive acknowledgment of receipt of all
disclosures required under this section via confirmation of consent.
3.Each virtual - currency kiosk must include a warning written prominently and in bold
type, stated in substantially the following form:
a.WARNING: CONSUMER FRAUD OFTEN STARTS WITH CONTACT FROM A
STRANGER WHO IS INITIATING A DISHONEST SCHEME. I UNDERSTAND
THAT CRIMINAL ACTIVITY MAY APPEAR IN MANY FORMS, INCLUDING:
(1)Claims of a frozen bank account or credit card.
(2)Fraudulent bank transactions.
(3)Claims of identity theft or job offerings in exchange for payments.
(4)Requests for payments to government agencies or companies.
(5)Requests for disaster relief donations or loans.
(6)Offers to purchase tickets for lotteries, sweepstakes, or drawings for
vehicles.
(7)Prompts to click on desktop popups, such as virus warnings or
communication from alleged familiar merchants.
(8)Communication from someone impersonating a representative of your bank
or a law enforcement officer.
(9)IF YOU BELIEVE YOU ARE BEING SCAMMED, CALL A LOCAL LAW
ENFORCEMENT OFFICER BEFORE ANY TRANSACTION.
b.WARNING: FUNDS LOST DUE TO USER ERROR OR FRAUD MAY NOT BE
RECOVERABLE. TRANSACTIONS CONDUCTED ON THIS
VIRTUAL - CURRENCY KIOSK ARE IRREVERSIBLE. I UNDERSTAND THESE
RISKS AND WISH TO CONTINUE WITH CONDUCTING MY
VIRTUAL - CURRENCY KIOSK TRANSACTION. PROTECT YOURSELF FROM
FRAUD. NEVER SEND MONEY TO SOMEONE YOU DO NOT KNOW.
Page No. 5 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31 Sixty-ninth
Legislative Assembly
4.The commissioner shall require the disclosure of material risks associated with virtual
currency and virtual-currency transactions, including:
a.The transaction may not be reversed;
b.The virtual - currency kiosk operator's liability for unauthorized virtual currency
transactions;
c.The virtual - currency kiosk customer's liability for unauthorized currency
transactions;
d.Virtual currency is not legal tender, backed or insured by the government, and
accounts and value balances are not subject to federal deposit insurance
corporation, national credit union administration, or securities investor protection
corporation protections;
e.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 individual initiates the
transaction;
f.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;
g.An individual who accepts a virtual currency as payment today is not required to
accept and might not accept virtual currency in the future;
h.The volatility and unpredictability of the price of virtual currency relative to fiat
currency may result in a significant loss over a short period;
i.The nature of virtual currency means any technological difficulties experienced by
virtual - currency kiosk operators may prevent access to or use of an individual's
virtual currency; and
j.Any bond maintained by the virtual - currency kiosk operator for the benefit of an
individual may not cover all losses an individual incurs.
5.The commissioner shall require disclosure of:
a.The amount of the transaction denominated in United States dollars as well as
the applicable virtual currency.
b.Any fees or expenses charged by the virtual - currency kiosk operator.
Page No. 6 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31 Sixty-ninth
Legislative Assembly
c.Any applicable exchange rates.
d.A daily virtual-currency transaction limit of no more than two thousand dollars per
day.
e.Notice of a change in the virtual - currency kiosk operator's rules or policies.
f.The name, address, and telephone number of the owner of the kiosk and the
days, time, and means by which a consumer may contact the owner for
consumer assistance. Any relevant state and local law enforcement agency for
reporting fraud must be displayed on or at the location of the virtual - currency
kiosk or on the first screen of the kiosk.
g.Under what circumstances the virtual - currency kiosk operator, without a court or
government order, discloses a person's account information to third parties.
h.Other disclosures customarily given in connection with a virtual currency
transaction.
6.After the completion of each transaction, the virtual - currency kiosk operator shall
provide an individual with a choice of a physical or digital receipt secured with
two - factor identification in the language chosen by the customer containing the
following:
a.The virtual - currency kiosk operator's name and contact information, including a
telephone number to answer questions and register complaints;
b.The relevant state and local law enforcement or government agency for reporting
fraud;
c.The type, value, date, and precise time of the transaction, transaction hash, and
each applicable virtual - currency address;
d.A unique transaction number able to be linked to the sender during a fraud
investigation;
e.A unique transaction number able to be linked to the designated recipient during
a fraud investigation;
f.All fees charged;
g.The exchange rate of the virtual currency to United States dollars;
h.A statement of the virtual - currency kiosk operator's liability for nondelivery or
delayed delivery; and
Page No. 7 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31 Sixty-ninth
Legislative Assembly
i.A statement of the virtual - currency kiosk operator's refund policy.
SECTION 4. Section 13-09.1-52 of the North Dakota Century Code is created and enacted
as follows:
13 - 09.1 - 52. Prevention of fraudulent activity.
1.A virtual - currency kiosk operator shall use blockchain analytics software to assist in
the detection and prevention of suspicious activity, including sending purchased virtual
currency from a virtual - currency kiosk operator to a virtual - currency wallet known to be
affiliated with fraudulent activity at the time of a transaction and identifying patterns
that reflect money laundering or other illicit activity. The commissioner may request
evidence from any virtual - currency kiosk operator of use of blockchain analytics.
2.A virtual - currency kiosk operator shall take reasonable steps to detect and prevent
fraud, including establishing and maintaining a written antifraud policy. The antifraud
policy must include:
a.The identification and assessment of fraud-related risk areas;
b.Procedures and controls to protect against identified risks;
c.Allocation of responsibility for monitoring risks; and
d.Procedures for the periodic evaluation and revision of the antifraud procedures,
controls, and monitoring mechanisms.
3.Each virtual - currency kiosk operator shall designate and employ a compliance officer
with the following requirements:
a.The individual must be qualified to coordinate and monitor compliance with this
chapter and all other applicable federal and state laws and rules;
b.The individual must be employed full-time by the virtual - currency kiosk operator;
and
c.The designated compliance officer may not be an individual who owns more than
twenty percent of the virtual - currency kiosk operator by whom the individual is
employed.
4.Compliance responsibilities required under federal and state laws and rules must be
completed by full-time employees of the virtual - currency kiosk operator.
Page No. 8 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29 Sixty-ninth
Legislative Assembly
5.A virtual - currency kiosk operator shall maintain, implement, and enforce a written
enhanced due diligence policy. The policy must be reviewed and approved by the
virtual - currency kiosk operator's board of directors or equivalent governing body.
6.A virtual - currency kiosk operator shall designate and employ a consumer protection
officer. The consumer protection officer:
a.Must be qualified to coordinate and monitor compliance with state and federal
law;
b.Must be employed full - time by the virtual - currency kiosk operator; and
c.May not own more than twenty percent of the virtual - currency kiosk operator.
SECTION 5. Section 13-09.1-53 of the North Dakota Century Code is created and enacted
as follows:
13 - 09.1 - 53. Daily transaction limit.
A virtual - currency kiosk operator may not accept transactions of more than two thousand
dollars of cash or the equivalent in virtual currency per calendar day with a single customer in
this state via one or more virtual - currency kiosks operated by the same virtual-currency
operator.
SECTION 6. Section 13-09.1-54 of the North Dakota Century Code is created and enacted
as follows:
13 - 09.1 - 54. Customer service.
A virtual - currency kiosk operator performing business in this state shall provide live
customer service at a minimum on Monday through Friday between eight a.m. central time and
ten p.m. central time. The customer service toll-free number must be displayed on the
virtual - currency kiosk or the virtual - currency kiosk screens.
Page No. 9 25.1011.03000
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23