Legislation on Cryptocurrency ATMs in Virginia
Legislation aimed at regulating cryptocurrency ATMs in Virginia successfully passed through both chambers of the state legislature and is now pending the governor’s approval. This new law introduces a set of statewide licensing protocols, consumer safety measures, and limits on transactions. Notably, operators of these kiosks are prohibited from branding them as ATMs or using terminology typically associated with traditional cash machines.
Response to Rising Scams
Spearheaded by Delegate Michelle Maldonado, the bill responds to a rise in scams targeting users of crypto kiosks, including an alarming case in Southwest Virginia where one individual lost $15,000. Reports indicate that scams contribute to about 7% of the entire crypto kiosk market, emphasizing the urgent need for regulatory measures to be established before the situation worsens.
Maldonado pointed out that once cryptocurrency transactions are executed and enter the blockchain, recovery becomes nearly impossible: “Once it goes into the exchange, there’s no way to trace it. There’s no way to get it back,” she remarked.
Proposed Regulations
The proposed regulations require kiosk operators to apply for state registration, pay applicable licensing fees, and adhere to strict limits on consumer transaction costs. Additionally, the law mandates that operators implement daily and monthly limits on transactions, as well as identity verification for all transactions undertaken at the kiosks. A safeguard of a 48-hour hold on transactions for new users will be in place, permitting refunds if fraud is suspected. Furthermore, kiosks will be required to display clear warning signs about potential scams.
This new registration framework will enable the state to monitor operators closely and ensure that refund options are available for any recoverable funds sent through these machines.
Delegate Maldonado highlighted that these kiosks often mislead consumers due to their physical resemblance to traditional ATMs, stating, “They look like ATMs. They’re shaped like ATMs. But instead of taking money out, you’re sort of putting money in to purchase crypto that goes into a broader exchange.”
Support from AARP Virginia
AARP Virginia has emphasized the necessity of these legislative changes, warning that scammers are increasingly exploiting unregulated kiosks to prey on residents, particularly older individuals who are particularly susceptible to fraud involving fictitious debts, legal threats, and deceptive romance schemes.
Proactive Measures
Maldonado characterized the bill as a forward-thinking measure rather than a reaction to ongoing issues, explaining that acting proactively now can prevent the percentage of scam-related businesses from escalating.
“That doesn’t mean that there’s no problem. It means that it’s in the beginning. And so this is the time to put the guardrails and the safeguards in place so that 7% doesn’t grow,” she expressed.
Should the governor sign the bill into law, Virginia will join other states in implementing supervisory measures over the expanding presence of crypto kiosks nationwide.
