2024 -- S 2504

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LC005092

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2024

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A N   A C T

RELATING TO FINANCIAL INSTITUTIONS -- CURRENCY TRANSMISSIONS --

VIRTUAL CURRENCY KIOSKS

     Introduced By: Senators Gu, DiPalma, Valverde, Miller, and Murray

     Date Introduced: March 01, 2024

     Referred To: Senate Commerce

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 19-14.3-1.1 of the General Laws in Chapter 19-14.3 entitled

"Currency Transmissions" is hereby amended to read as follows:

     19-14.3-1.1. Definitions.

     In addition to the definitions provided in § 19-14-1 the following definitions are applicable

to this chapter:

     (1) “Control” means:

     (i) When used in reference to a transaction or relationship involving virtual currency, the

power to execute unilaterally or prevent indefinitely a virtual currency transaction; and

     (ii) When used in reference to a person, the direct or indirect power to direct the

management, operations, or policies of the person through legal or beneficial ownership of twenty-

five percent (25%) or more of the voting power in the person or under a contract, arrangement, or

understanding.

     (2) “Department” means the department of business regulation, division of banking.

     (3) “Exchange,” used as a verb, means to assume control of virtual currency from or on

behalf of a resident, at least momentarily, to sell, trade, or convert:

     (i) Virtual currency for legal tender, bank credit, or one or more forms of virtual currency;

or

     (ii) Legal tender or bank credit for one or more forms of virtual currency.

     (4) “Legal tender” means a medium of exchange or unit of value, including the coin or

paper money of the United States, issued by the United States or by another government.

     (5) “Licensee” means a person licensed under this chapter.

     (6) “Monetary value” means a medium of exchange, whether or not redeemable in money.

     (7) “Reciprocity agreement” means an arrangement between the department and the

appropriate licensing agency of another state that permits a licensee operating under a license

granted by the other state to engage in currency transmission business activity with or on behalf of

a resident.

     (8) “Record” means information that is inscribed on a tangible medium or that is stored in

an electronic or other medium and is retrievable in perceivable form.

     (9) “Registry” means the Nationwide Multistate Licensing System.

     (10) “Resident”:

     (i) Means a person that:

     (A) Is domiciled in this state;

     (B) Is physically located in this state for more than one hundred eighty-three (183) days of

the previous three hundred sixty-five (365) days; or

     (C) Has a place of business in this state; and

     (ii) Includes a legal representative of a person that satisfies subsection (10)(i) of this

section.

     (11) “Responsible individual” means an individual who has managerial authority with

respect to a licensee’s currency transmission business activity with or on behalf of a resident.

     (12) “Sign” means, with present intent to authenticate or adopt a record:

     (i) To execute or adopt a tangible symbol; or

     (ii) To attach to or logically associate with the record an electronic symbol, sound, or

process.

     (13) “State” means a state of the United States, the District of Columbia, Puerto Rico, the

United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the

United States.

     (14) “Store,” except in the phrase “store of value,” means to maintain control of virtual

currency on behalf of a resident by a person other than the resident. “Storage” and “storing” have

corresponding meanings.

     (15) “Transfer” means to assume control of virtual currency from or on behalf of a resident

and to:

     (i) Credit the virtual currency to the account of another person;

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     (ii) Move the virtual currency from one account of a resident to another account of the

same resident; or

     (iii) Relinquish control of virtual currency to another person.

     (16) “U.S. 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.

     (17) “Virtual currency business activity” means:

     (i) Exchanging, transferring, or storing virtual currency whether directly or through an

agreement with a virtual currency control-services vendor or through a virtual currency kiosk;

     (ii) 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

     (iii) Exchanging one or more digital representations of value used within one or more

online games, game platforms, or family of games for:

     (A) Virtual currency offered by or on behalf of the same publisher from which the original

digital representation of value was received; or

     (B) Legal tender 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.

     (18) "Virtual currency address" means an alphanumeric identifier representing a

destination for a virtual currency transfer that is associated with a virtual currency wallet.

     (19) "Virtual currency kiosk" means an electronic terminal acting as a mechanical agent of

the owner or operator to enable the owner or operator to facilitate the exchange of virtual currency

for fiat currency or other virtual currency, including, but not limited to, by:

     (i) Connecting directly to a separate virtual currency exchanger that performs the actual

virtual currency transmission; or

     (ii) Drawing upon the virtual currency in the possession of the owner or operator of the

electronic terminal.

     (18)(20) “Virtual currency control-services vendor” means a person who has control of

virtual currency solely under an agreement with a person who, on behalf of another person, assumes

control of virtual currency.

     (21) "Virtual currency wallet" means a software application or other mechanism providing

a means for holding, storing and transferring virtual currency.

     SECTION 2. Chapter 19-14.3 of the General Laws entitled "Currency Transmissions" is

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hereby amended by adding thereto the following section:

     19-14.3-3.9. Virtual kiosks -- Operation.

     (a) The owner or operator of a virtual currency kiosk shall, in establishing a relationship

with a customer and prior to entering into an initial virtual currency transaction for, on behalf of or

with the customer, disclose in clear, conspicuous and legible writing in the English language all

material risks associated with virtual currency generally, including, but not limited to, the

following:

     (1) A disclosure, which shall be acknowledged by the customer, provided separately from

the disclosures provided pursuant to subsections (2) to (9), inclusive, of this section and written

prominently and in bold type, stating the following: "WARNING: LOSSES DUE TO

FRAUDULENT OR ACCIDENTAL TRANSACTIONS MAY NOT BE RECOVERABLE AND

TRANSACTIONS IN VIRTUAL CURRENCY ARE IRREVERSIBLE.";

     (2) Virtual currency is not 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;

     (3) Some virtual currency transactions shall be deemed to be made when recorded on a

public ledger, which may not be the date or time when the customer initiates the virtual currency

transaction;

     (4) The value of virtual currency may be derived from the continued willingness of market

participants to exchange fiat currency for virtual currency, which may result in the permanent and

total loss of the value of a particular virtual currency, if the market for that virtual currency

disappears;

     (5) There is no assurance that a person who accepts a virtual currency as payment today

will continue to do so in the future;

     (6) The volatility and unpredictability of the price of virtual currency relative to fiat

currency may result in a significant loss over a short period of time;

     (7) The nature of virtual currency may lead to an increased risk of fraud or cyber-attack;

     (8) The nature of virtual currency means that any technological difficulties experienced by

the owner or operator may prevent access to or use of a customer's virtual currency; and

     (9) Any bond maintained by the owner or operator for the benefit of the customers of such

owner or operator may not be sufficient to cover all losses incurred by such customers.

     (b) The owner or operator of a virtual currency kiosk shall, when opening an account for a

new customer and prior to entering into an initial virtual currency transaction for, on behalf of or

with such customer, disclose in clear, conspicuous and legible writing in the English language,

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using not less than twenty-four point (24 pt) sans serif-type font, all relevant terms and conditions

associated with the products, services and activities of the owner or operator and virtual currency

generally, including, but not limited to, the following:

     (1) The customer's liability for unauthorized virtual currency transactions;

     (2) The customer's right to stop payment of a preauthorized virtual currency transfer and

the procedure used to initiate a stop-payment order;

     (3) Under what circumstances the owner or operator will, absent a court or government

order, disclose information concerning the customer's account to third parties;

     (4) The customer's right to receive periodic account statements and valuations from the

owner operator;

     (5) The customer's right to receive a receipt, trade ticket or other evidence of a virtual

currency transaction; and

     (6) The customer's right to prior notice of a change in the rules or policies of the owner or

operator.

     (c) The owner or operator of a virtual currency kiosk shall, prior to each transaction in

virtual currency for, on behalf of or with a customer, disclose to such customer in clear, conspicuous

and legible writing in the English language, using not less than twenty-four point (24 pt) sans serif

type font, the terms and conditions of the virtual currency transaction, including, but not limited to,

the following:

     (1) The amount of the transaction;

     (2) Any fees, expenses and charges borne by the customer, including, but not limited to,

applicable exchange rates;

     (3) The type and nature of the virtual currency transaction;

     (4) A warning that, once executed, the virtual currency transaction may not be undone, if

applicable;

     (5) A daily virtual currency transaction limit in accordance with subsection (g) of this

section; and

     (6) The difference in the sale price of the virtual currency versus the current market price.

     (d) The owner or operator of a virtual currency kiosk shall ensure that each customer

acknowledges receipt of all disclosures required under this section.

     (e) The owner or operator of a virtual currency kiosk shall, upon the completion of any

virtual currency transaction, provide to the customer a receipt containing the following information:

     (1) The name of, and contact information for, the owner or operator, including a telephone

number established by the owner or operator to answer questions and register complaints;

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     (2) The type, value, date and precise time of such virtual currency transaction, and each

virtual currency address;

     (3) The fee charged;

     (4) The exchange rate, if applicable;

     (5) A statement of the liability of the owner or operator for non-delivery or delayed

delivery;

     (6) A statement of the refund policy of the owner or operator; and

     (7) Any additional information the department may require.

     (f) The department may establish a schedule of maximum fees that an owner or operator

of a virtual currency kiosk may charge for specific services.

     (g) There is established a maximum daily transaction limit of two thousand five hundred

dollars ($2,500) for each customer of a virtual currency kiosk.

     (h) The owner or operator of a virtual currency kiosk shall, at such owner's or operator's

cost and within seventy-two (72) hours after a virtual currency transaction, allow the customer to

cancel and receive a full refund for the virtual currency transaction if such virtual currency

transaction:

     (1) Is the customer's first virtual currency transaction with such owner or operator; and

     (2) Is to a virtual currency wallet or exchange located outside of the United States.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO FINANCIAL INSTITUTIONS -- CURRENCY TRANSMISSIONS --

VIRTUAL CURRENCY KIOSKS

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     This act would establish guidelines for the operation of virtual currency (crypto) kiosks.

     This act would take effect upon passage.

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