RI
Rhode Island Senate Bill S0016

Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0016 Compare Versions

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99 S T A T E O F R H O D E I S L A N D
1010 IN GENERAL ASSEMBLY
1111 JANUARY SESSION, A.D. 2025
1212 ____________
1313
1414 A N A C T
1515 RELATING TO FINANCIAL INSTITUTIONS -- CURRENCY TRANSMISSIO NS
1616 Introduced By: Senators Gu, Zurier, DiPalma, Burke, Urso, Bell, and Gallo
1717 Date Introduced: January 23, 2025
1818 Referred To: Senate Commerce
1919
2020
2121 It is enacted by the General Assembly as follows:
2222 SECTION 1. Section 19-14.3-1.1 of the General Laws in Chapter 19-14.3 entitled 1
2323 "Currency Transmissions" is hereby amended to read as follows: 2
2424 19-14.3-1.1. Definitions. 3
2525 In addition to the definitions provided in § 19-14-1 the following definitions are applicable 4
2626 to this chapter: 5
2727 (1) "Blockchain analytics" means the analysis of data from blockchains or public 6
2828 distributed ledgers, including associated transaction information. 7
2929 (2) "Blockchain analytics software" means a software service that uses blockchain 8
3030 analytics data to provide risk-specific information about virtual currency wallet addresses, among 9
3131 other things. 10
3232 (1)(3) “Control” means: 11
3333 (i) When used in reference to a transaction or relationship involving virtual currency, the 12
3434 power to execute unilaterally or prevent indefinitely a virtual currency transaction; and 13
3535 (ii) When used in reference to a person, the direct or indirect power to direct the 14
3636 management, operations, or policies of the person through legal or beneficial ownership of twenty-15
3737 five percent (25%) or more of the voting power in the person or under a contract, arrangement, or 16
3838 understanding. 17
3939 (2)(4) “Department” means the department of business regulation, division of banking. 18
4040 (3)(5) “Exchange,” used as a verb, means to assume control of virtual currency from or on 19
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4444 behalf of a resident, at least momentarily, to sell, trade, or convert: 1
4545 (i) Virtual currency for legal tender, bank credit, or one or more forms of virtual currency; 2
4646 or 3
4747 (ii) Legal tender or bank credit for one or more forms of virtual currency. 4
4848 (4)(6) “Legal tender” means a medium of exchange or unit of value, including the coin or 5
4949 paper money of the United States, issued by the United States or by another government. 6
5050 (5)(7) “Licensee” means a person licensed under this chapter. 7
5151 (6)(8) “Monetary value” means a medium of exchange, whether or not redeemable in 8
5252 money. 9
5353 (9) "New customer" means an individual who has never previously transacted with the 10
5454 virtual currency kiosk operator. The new customer shall remain defined as such during the thirty 11
5555 (30) day period after the first financial transaction with the virtual currency kiosk operator. 12
5656 (7)(10) “Reciprocity agreement” means an arrangement between the department and the 13
5757 appropriate licensing agency of another state that permits a licensee operating under a license 14
5858 granted by the other state to engage in currency transmission business activity with or on behalf of 15
5959 a resident. 16
6060 (8)(11) “Record” means information that is inscribed on a tangible medium or that is stored 17
6161 in an electronic or other medium and is retrievable in perceivable form. 18
6262 (9)(12) “Registry” means the Nationwide Multistate Licensing System. 19
6363 (10)(13) “Resident”: 20
6464 (i) Means a person that: 21
6565 (A) Is domiciled in this state; 22
6666 (B) Is physically located in this state for more than one hundred eighty-three (183) days of 23
6767 the previous three hundred sixty-five (365) days; or 24
6868 (C) Has a place of business in this state; and 25
6969 (ii) Includes a legal representative of a person that satisfies subsection (10)(i) of this 26
7070 section. 27
7171 (11)(14) “Responsible individual” means an individual who has managerial authority with 28
7272 respect to a licensee’s currency transmission business activity with or on behalf of a resident. 29
7373 (12)(15) “Sign” means, with present intent to authenticate or adopt a record: 30
7474 (i) To execute or adopt a tangible symbol; or 31
7575 (ii) To attach to or logically associate with the record an electronic symbol, sound, or 32
7676 process. 33
7777 (13)(16) “State” means a state of the United States, the District of Columbia, Puerto Rico, 34
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8181 the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of 1
8282 the United States. 2
8383 (14)(17) “Store,” except in the phrase “store of value,” means to maintain control of virtual 3
8484 currency on behalf of a resident by a person other than the resident. “Storage” and “storing” have 4
8585 corresponding meanings. 5
8686 (18) "Transaction hash" means a unique identifier made up of a string of characters that act 6
8787 as a record of and provide proof that the transaction was verified and added to the blockchain. 7
8888 (15)(19) “Transfer” means to assume control of virtual currency from or on behalf of a 8
8989 resident and to: 9
9090 (i) Credit the virtual currency to the account of another person; 10
9191 (ii) Move the virtual currency from one account of a resident to another account of the 11
9292 same resident; or 12
9393 (iii) Relinquish control of virtual currency to another person. 13
9494 (16)(20) “U.S. Dollar equivalent of virtual currency” means the equivalent value of a 14
9595 particular virtual currency in United States dollars shown on a virtual currency exchange based in 15
9696 the United States for a particular date or period specified in this chapter. 16
9797 (21) "Virtual currency address" means an alphanumeric identifier associated with a virtual 17
9898 currency wallet identifying the location to which a virtual currency transaction can be sent. 18
9999 (17)(22) “Virtual currency business activity” means: 19
100100 (i) Exchanging, transferring, or storing virtual currency whether directly or through an 20
101101 agreement with a virtual currency control-services vendor; 21
102102 (ii) Holding electronic precious metals or electronic certificates representing interests in 22
103103 precious metals on behalf of another person or issuing shares or electronic certificates representing 23
104104 interests in precious metals; or 24
105105 (iii) Exchanging one or more digital representations of value used within one or more 25
106106 online games, game platforms, or family of games for: 26
107107 (A) Virtual currency offered by or on behalf of the same publisher from which the original 27
108108 digital representation of value was received; or 28
109109 (B) Legal tender or bank credit outside the online game, game platform, or family of games 29
110110 offered by or on behalf of the same publisher from which the original digital representation of value 30
111111 was received. 31
112112 (18)(23) “Virtual currency control-services vendor” means a person who has control of 32
113113 virtual currency solely under an agreement with a person who, on behalf of another person, assumes 33
114114 control of virtual currency. 34
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118118 (24) "Virtual currency kiosk" means an electronic terminal acting as a mechanical agent of 1
119119 the virtual currency kiosk operator to enable the virtual currency kiosk operator to facilitate the 2
120120 exchange of virtual currency for money, bank credit, or other virtual currency including, but not 3
121121 limited to, by: 4
122122 (i) Connecting directly to a separate "virtual currency exchange" that performs the actual 5
123123 virtual currency transmission; or 6
124124 (ii) Drawing upon the virtual currency in the possession of the electronic terminal's 7
125125 operator. 8
126126 (25) "Virtual currency kiosk transaction" means a transaction conducted or performed, in 9
127127 whole or in part, by electronic means via a virtual currency kiosk. Virtual currency kiosk transaction 10
128128 also means a transaction made at a virtual currency kiosk to purchase virtual currency with fiat 11
129129 currency or to sell virtual currency for fiat currency. 12
130130 (26) "Virtual currency wallet" means a software application or other mechanism providing 13
131131 a means for holding, storing and transferring virtual currency. 14
132132 (27) "Virtual-currency kiosk operator" means a person that engages in virtual-currency 15
133133 business activity via a money transmission kiosk located in this state or a person that owns, 16
134134 operates, or manages a money transmission kiosk located in this state through which virtual 17
135135 currency business activity is offered. 18
136136 SECTION 2. Chapter 19-14.3 of the General Laws entitled "Currency Transmissions" is 19
137137 hereby amended by adding thereto the following sections: 20
138138 19-14.3-3.9. Virtual currency kiosk operator licensing and kiosk registration. 21
139139 (a) A kiosk operator shall not engage in virtual currency business activity or hold itself out 22
140140 as being able to engage in virtual currency business activity with or on behalf of another person 23
141141 unless the kiosk operator is licensed in the state as a money transmitter. 24
142142 (b) A virtual currency kiosk operator shall not locate, or allow a third party to locate, a 25
143143 virtual currency kiosk in this state unless the virtual currency kiosk operator registers the money 26
144144 transmission kiosk and obtains the prior approval of the department of business regulation (DBR) 27
145145 for its activation. 28
146146 (c) Each virtual currency kiosk operator shall submit to the DBR a quarterly report of the 29
147147 location of each virtual currency kiosk located within the State of Rhode Island within forty-five 30
148148 (45) days of the end of the calendar quarter. The location report shall include, at a minimum, the 31
149149 following regarding the location where a virtual currency kiosk is located: 32
150150 (1) The Company’s legal name; 33
151151 (2) Any fictitious or trade name; 34
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155155 (3) Physical address; 1
156156 (4) Start date of operation of virtual currency kiosk at location; 2
157157 (5) End date of operation of virtual currency kiosk at location, if applicable; and 3
158158 (6) Virtual currency address(es) associated with the virtual currency kiosk 4
159159 19-14.3-3.10. Disclosures. 5
160160 A virtual currency kiosk operator shall disclose in a clear, conspicuous, and easily readable 6
161161 manner in the chosen language of the customer, all relevant terms and conditions generally 7
162162 associated with the products, services, and activities of the virtual currency kiosk operator and 8
163163 virtual currency. 9
164164 (1) With regard to acknowledgment of disclosures, the virtual currency kiosk operator shall 10
165165 receive acknowledgement of receipt of all disclosures required under this section via confirmation 11
166166 of consent. 12
167167 (2) With regard to relevant disclosures, the disclosures under this subsection shall address 13
168168 at least the following: 14
169169 (i) A warning, written prominently and in bold type, and provided separately from the 15
170170 disclosures below, stating: "WARNING: LOSSES DUE TO FRAUDULENT OR ACCIDENTAL 16
171171 TRANSACTIONS ARE NOT RECOVERABLE AND TRANSACTIONS IN VIRTUAL 17
172172 CURRENCY ARE IRREVERSIBLE. VIRTUAL CURRENCY TRANSACTIONS MAY BE 18
173173 USED TO STEAL YOUR MONEY BY CRIMINALS IMPERSONATING THE 19
174174 GOVERNMENT, ORGANIZATIONS, OR YOUR LOVED ONES. THEY CAN TH REATEN 20
175175 JAIL TIME, SAY YOUR IDENTITY HAS BEEN STOLEN, ALLEGE YOUR COMPUTER HAS 21
176176 BEEN HACKED, INSIST YOU WITHDRAW MONEY FROM YOUR BANK ACCOUNT TO 22
177177 PURCHASE VIRTUAL CURRENCY, OR A NUMBER OF OTHER SCAMS. IF YOU BELIEVE 23
178178 YOU ARE BEING SCAMMED, CALL YOUR LOCAL LAW ENFORCEMENT." 24
179179 (ii) The material risks associated with virtual currency and virtual currency transactions, 25
180180 including: 26
181181 (A) A warning that once completed, the transaction may not be reversed; 27
182182 (B) The virtual currency kiosk operator’s liability for unauthorized virtual currency 28
183183 transactions; 29
184184 (C) The virtual currency kiosk customer’s liability for unauthorized currency transactions; 30
185185 (D) Virtual currency is not legal tender, backed or insured by the government, and accounts 31
186186 and value balances are not subject to Federal Deposit Insurance Corporation, National Credit Union 32
187187 Administration, or Securities Investor Protection Corporation protections; 33
188188 (E) Some virtual currency transactions are deemed to be made when recorded on a public 34
189189
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192192 ledger which may not be the date or time when the person initiates the transaction; 1
193193 (F) Virtual currency's value may be derived from market participants' continued 2
194194 willingness to exchange fiat currency for virtual currency, which may result in the permanent and 3
195195 total loss of a particular virtual currency's value if the market for virtual currency disappears; 4
196196 (G) A person who accepts a virtual currency as payment today is not required to accept and 5
197197 might not accept virtual currency in the future; 6
198198 (H) The volatility and unpredictability of the price of virtual currency relative to fiat 7
199199 currency may result in a significant loss over a short period; 8
200200 (I) The nature of virtual currency means that any technological difficulties experienced by 9
201201 virtual currency kiosk operators may prevent access to or use of a person's virtual currency; and 10
202202 (J) Any bond maintained by the virtual currency kiosk operator for the benefit of a person 11
203203 may not cover all losses a person incurs. 12
204204 (iii) The amount of the transaction denominated in US Dollars as well as the applicable 13
205205 virtual currency; 14
206206 (iv) Any fees or expenses charged by the virtual currency kiosk operator; 15
207207 (v) Any applicable exchange rates; 16
208208 (vi) A daily virtual currency transaction limit of no more than one thousand dollars 17
209209 ($1,000); 18
210210 (vii) Notice of a change in the virtual currency kiosk operator's rules or policies; 19
211211 (viii) The name, address, and telephone number of the owner of the kiosk and the days, 20
212212 time, and means by which a consumer can contact the owner for consumer assistance shall be 21
213213 displayed on or at the location of the virtual currency kiosk, or on the first screen of such kiosk; 22
214214 (ix) Under what circumstances the virtual currency kiosk operator, without a court or 23
215215 government order, discloses a person's account information to third parties; and 24
216216 (x) Other disclosures that are customarily given in connection with a virtual currency 25
217217 transaction. 26
218218 (3) With regard to a transaction receipt, upon each transaction's completion, the virtual 27
219219 currency kiosk operator shall provide a person with a physical receipt in the language chosen by 28
220220 the customer containing the following information: 29
221221 (i) The virtual currency kiosk operator's name and contact information, including a 30
222222 telephone number to answer questions and register complaints; 31
223223 (ii) The type, value, date, and precise time of the transaction, transaction hash, and each 32
224224 applicable virtual currency address; 33
225225 (iii) The name and contact information of the sender; 34
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229229 (iv) The name and contact information of the designated recipient; 1
230230 (v) All fees charged; 2
231231 (vi) The exchange rate of the virtual currency to US Dollars; 3
232232 (vii) A statement of the virtual currency kiosk operator's liability for non-delivery or 4
233233 delayed delivery; 5
234234 (viii) A statement of the virtual currency kiosk operator's refund policy; and, 6
235235 (ix) Any additional information the department of business regulation may require. 7
236236 19-14.3-3.11. Prevention of fraudulent activity. 8
237237 All virtual currency kiosk operators shall use blockchain analytics software to assist in the 9
238238 prevention of sending purchased virtual currency from a virtual currency kiosk operator to a virtual 10
239239 currency wallet known to be affiliated with fraudulent activity at the time of a transaction. The 11
240240 DBR may request evidence from any virtual currency kiosk operator of current use of blockchain 12
241241 analytics. 13
242242 (1) With regard to fraud policy, all virtual currency kiosk operators shall take reasonable 14
243243 steps to detect and prevent fraud, including establishing and maintaining a written anti-fraud policy. 15
244244 The anti-fraud policy shall, at a minimum, include: 16
245245 (i) The identification and assessment of fraud related risk areas; 17
246246 (ii) Procedures and controls to protect against identified risks; 18
247247 (iii) Allocation of responsibility for monitoring risks; and 19
248248 (iv) Procedures for the periodic evaluation and revision of the anti-fraud procedures, 20
249249 controls, and monitoring mechanisms. 21
250250 (2) With regard to a compliance officer, each virtual currency kiosk operator shall 22
251251 designate and employ a compliance officer with the following requirements: 23
252252 (i) The individual shall be qualified to coordinate and monitor compliance with any virtual 24
253253 currency business activity transacted in this state pursuant to this chapter and all other applicable 25
254254 federal and state laws, rules, and regulations; 26
255255 (ii) The individual shall be employed full-time by the virtual currency kiosk operator; 27
256256 (iii) The designated compliance officer shall not be any individual who owns more than 28
257257 twenty percent (20%) of the virtual currency kiosk operator by whom the individual is employed; 29
258258 and 30
259259 (iv) Compliance responsibilities required under federal and state laws, rules, and 31
260260 regulations shall be completed by full-time employees of the virtual currency kiosk operator. 32
261261 (3) With regard to refunds for new customers, a virtual currency kiosk operator shall issue 33
262262 a refund to a new customer for the full amount of all transactions made within the thirty (30) day 34
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266266 new customer time period upon the request of the customer. In order to receive a refund under this 1
267267 subsection, a new customer shall have been fraudulently induced to engage in the virtual currency 2
268268 transactions and contacts the virtual currency kiosk operator and a government or law enforcement 3
269269 agency to inform them of the fraudulent nature of the transaction agency within ninety (90) days 4
270270 of the last transaction to occur during the thirty (30) day new customer time period. 5
271271 (4) With regard to refunds for existing customers, a virtual currency kiosk operator shall 6
272272 issue a refund to an existing customer for the full amount of all transaction fees upon the request 7
273273 of an existing customer. In order to receive a refund under this subsection, a customer shall have 8
274274 been fraudulently induced to engage in the virtual currency transactions and contacts the virtual 9
275275 currency kiosk operator and a government or law enforcement agency to inform them of the 10
276276 fraudulent nature of the transaction within ninety (90) days of the transaction. 11
277277 19-14.3-3.12. Daily transaction limit. 12
278278 A virtual currency kiosk operator shall not accept transactions of more than one thousand 13
279279 US dollars ($1,000) of cash or the equivalent in virtual currency in a day in connection with virtual 14
280280 currency kiosk transactions with a single customer in this state via one or more virtual currency 15
281281 kiosks. 16
282282 19-14.3-3.13. Fee cap. 17
283283 The aggregate fees and charges, directly or indirectly, charged to a customer related to a 18
284284 single transaction or series of related transactions involving virtual currency effected through a 19
285285 money transmission kiosk in Rhode Island, including any difference between the price charged to 20
286286 a customer to buy, sell, exchange, swap, or convert virtual currency and the prevailing market value 21
287287 of such virtual currency at the time of such transaction, shall not exceed the greater of the following: 22
288288 (1) Five US dollars ($5.00); or 23
289289 (2) Three percent (3.0%) of the US dollar equivalent of virtual currency involved in the 24
290290 transaction or transactions. 25
291291 19-14.3-3.14. Customer service. 26
292292 All virtual currency kiosk operators performing business in the state shall provide live 27
293293 customer service at a minimum on Monday through Friday between 8:00 AM EST and 10:00 PM 28
294294 EST. The customer service toll free number shall be displayed on the virtual currency kiosk or the 29
295295 virtual currency kiosk screens. 30
296296 SECTION 3. This act shall take effect upon passage. 31
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303303 EXPLANATION
304304 BY THE LEGISLATIVE COUNCIL
305305 OF
306306 A N A C T
307307 RELATING TO FINANCIAL INSTITUTIONS -- CURRENCY TRANSMISSIO NS
308308 ***
309309 This act would establish regulation by the department of business regulation (DBR) over 1
310310 the practices and procedures of virtual currency kiosk operators to prevent fraud related to the use 2
311311 of virtual currency kiosks, by establishing daily transaction limits and the regulating of fees. 3
312312 This act would take effect upon passage. 4
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