SF 449 (LSB 1729SV (3) 91)

SENATE FILE 449

BY  COMMITTEE ON TECHNOLOGY

(SUCCESSOR TO SSB 1142)

A BILL FOR

An Act relating to digital financial asset transaction kiosks.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  533C.1004  Digital financial asset transaction kiosks.
   1.  Definitions. As used in this section, unless the context otherwise requires:
   a.  “Charges” means any of the following:
   (1)  A fee or expense paid by a consumer.
   (2)  The difference between the current market price of a digital financial asset on a licensed digital financial asset exchange and the price of the digital financial asset charged to a consumer.
   b.  “Digital financial asset” means a virtual representation of value or rights that can be transferred, stored, or traded electronically and used for payment or investment purposes.
   c.  “Digital financial asset transaction kiosk” means an electronic information processing device that is capable of accepting or dispensing United States coin and paper currency in exchange for a digital financial asset.
   d.  “Licensed digital financial asset exchange” means a digital financial asset exchange that is not an operator and that has a license under section 533C.301 to engage in the business of money transmission in this state. 
   e.  “Operator” means a person who owns, operates, or manages a digital financial asset transaction kiosk in this state.
   f.  “Transaction hash” means a unique identifier made up of a string of characters that act as a record of, and proof of, a digital financial asset transaction being verified and added to a blockchain.
   2.  Daily transactions. An operator shall not, via a digital financial asset transaction kiosk, accept from a consumer or dispense to a consumer more than one thousand dollars per calendar day.
   3.  Maximum charges. An operator shall not directly or indirectly collect charges related to a digital financial asset transaction from a consumer that exceed the greater of the following:
   a.  Five dollars.
   b.  Fifteen percent of the United States currency equivalent of the digital financial assets involved in the digital financial asset transaction according to the public quoted market price of the digital financial asset on a licensed digital financial asset exchange at the date and time the consumer initiates the digital financial asset transaction.
   4.  Required disclosure. 
   a.  Prior to a digital financial asset transaction, the operator shall provide a written disclosure to the consumer in English, and in the primary language used by the operator to advertise, solicit, or negotiate with the consumer, containing the terms and conditions of the digital financial asset transaction, including, at a minimum, all of the following:
   (1)  The dollar amount, in United States currency equivalent, of the digital financial asset involved in the transaction.
   (2)  Any charges to be collected by the operator.
   (3)  If an operator fails to provide a process to reverse or refund a digital financial asset transaction, a warning that all digital financial asset transactions are final.
   (4)  The following written warning against fraud:
WARNING: CONSUMER FRAUD OFTEN STARTS WITH CONTACT FROM A STRANGER WHO IS INITIATING A DISHONEST SCHEME. CRIMINAL ACTIVITY MAY APPEAR IN MANY FORMS, INCLUDING BUT NOT LIMITED TO THE FOLLOWING:
   1.  Claims of a frozen bank account or credit card.
   2.  Claims of fraudulent financial transactions.
   3.  Claims of identity theft or job offers in exchange for payment.
   4.  Requests for payment 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 pop-ups, 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.
IF YOU BELIEVE YOU ARE BEING SCAMMED, CALL YOUR LOCAL LAW ENFORCEMENT.
WARNING: TRANSACTIONS CONDUCTED ON THIS DIGITAL FINANCIAL ASSET TRANSACTION KIOSK ARE IRREVERSIBLE. PROTECT YOURSELF FROM FRAUD. NEVER SEND MONEY TO SOMEONE YOU DO NOT KNOW.

   b.  A disclosure required under paragraph “a” shall be clear and conspicuous and provided separately from any other disclosures or information provided by the operator.
   5.  Required receipt. For any digital financial asset transaction made at an operator’s digital financial asset transaction kiosk, the operator shall provide the consumer with a receipt. When possible, the receipt shall be a physical receipt. The operator may provide the receipt in multiple communications, if necessary. The receipt shall include, at a minimum, all of the following information:
   a.  The name of the consumer.
   b.  The date and time of the digital financial asset transaction, the type, value, and transaction hash of the digital financial asset transaction, and each applicable virtual currency address.
   c.  The legal name of the operator and the operator’s contact information, including a telephone number, that may be used by the consumer to get answers to questions and to register complaints.
   d.  The dollar amount of the digital financial asset involved in the transaction and the exchange rate of the virtual currency to dollars.
   e.  (1)  The dollar amount of all charges collected by the operator in relation to the digital financial asset transaction.
   (2)  The legal name of the licensed digital financial asset exchange the operator used to calculate the charges described in subsection 1, paragraph “a”, subparagraph (2).
   f.  A list of relevant state and local law enforcement and regulatory agencies for reporting fraud.
   g.  A statement of the operator’s refund policy.
   h.  Any additional information the operator deems necessary.
   i.  Any additional information required by federal law.
   6.  Required report. An operator shall provide a list to the division of banking of the street address locations of all digital financial asset transaction kiosks that the operator owns, operates, or manages in this state. An operator shall provide the division with updates to the list within thirty calendar days of any change to the list. The division shall make each operator’s list available to the public via the division’s internet site.
   7.  Operator duties.
   a.  If an operator does not engage in digital financial asset transactions, but facilitates or permits another person to engage in digital financial asset transactions via the operator’s digital financial asset transaction kiosk, the operator shall do all of the following:
   (1)  Ensure that the person engaging in digital financial asset transactions has a license to engage in the business of money transmission under section 533C.301.
   (2)  Ensure that charges collected from a consumer via the digital financial asset transaction kiosk comply with this section.
   (3)  Ensure that the person complies with this section.
   b.  An operator shall provide live customer service a minimum of Monday through Friday between the hours of 8:00 a.m. and 10:00 p.m. The customer service toll-free telephone number shall be displayed on the digital financial asset transaction kiosk.
   c.  An operator shall use blockchain analytics software to assist in the prevention of sending a purchased digital financial asset from an operator to a virtual currency wallet known to be affiliated with fraudulent activity at the time of a digital financial asset transaction, and to detect transaction patterns indicative of fraud or other illicit activities. The superintendent may request evidence from an operator of current use of blockchain analytics software.
   d.  For the purpose of facilitating law enforcement and regulatory agency communications with the operator in the event of a consumer report of fraud, an operator shall maintain a dedicated telephone number or email address for use by law enforcement and regulatory agencies.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to digital financial asset transaction kiosks. “Digital financial asset transaction kiosk” (kiosk) is defined in the bill.
   Under the bill, an operator shall not, via a kiosk, accept from, or dispense to, a consumer more than $1,000 per day. “Operator” is defined in the bill. An operator shall not collect charges from a consumer related to a digital financial asset transaction (transaction) that exceed the greater of $5, or 15 percent of the United States currency equivalent of digital financial assets (asset) involved in the transaction.
   Prior to a transaction, the operator shall provide a written disclosure to the consumer that includes the dollar amount of the asset involved in the transaction, any charges collected by the operator, if an operator does not provide a method to reverse or refund a transaction, a warning that all transactions are final, and a warning against fraud. The disclosure shall be clear and conspicuous and provided separately from any other disclosure provided by the operator.
   For any transaction made at an operator’s kiosk, the operator shall provide the consumer with a receipt that includes the information detailed in the bill. When possible, the receipt shall be a physical receipt. The operator may provide the receipt in multiple communications if necessary. An operator shall provide a list to the division of banking (division) of all locations of the operator’s kiosks in the state. An operator shall provide the division with updates to the list within 30 days of a change. The division shall make each operator’s list available to the public via the division’s internet site.
   If an operator does not engage in asset transactions, but facilitates or permits another person to engage in asset transactions via the operator’s kiosk, the operator shall ensure that the person has a license under Code section 533C.301, and that charges collected from a consumer via the kiosk comply with the bill. An operator shall provide live customer service as detailed in the bill. An operator shall use blockchain analytics software to protect against fraud as detailed in the bill, and an operator shall maintain a dedicated telephone number and email address for use by law enforcement and regulatory agencies.