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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
cryptocurrency kiosk; license; fraud prevention
Purpose
Prescribes requirements and limitations for a cryptocurrency kiosk operator (operator) doing business in Arizona.
Background
Cryptocurrency is a type of convertible virtual currency that can be used as payment for goods and services, digitally traded between users and exchanged for or into real currency or digital assets (IRS).
The Department of Insurance and Financial Institutions (DIFI) governs management of money transmission licensure and regulations. Money transmission is the act of: 1) selling or issuing payment instruments to a person located in Arizona; 2) selling or issuing stored value to a person located in Arizona; or 3) receiving money for transmission from a person located in Arizona. Money transmission does not include the act of providing solely online telecommunications services or network access (A.R.S. § 6-1201).
The Attorney General (AG) enforces the Consumer Fraud Act (Act) by investigating consumer complaints, filing enforcement actions against persons who have violated the Act and providing consumer fraud education programs intended to rectify violations or alleged violations of the Act. In an enforcement action, the AG may obtain from a person found in violation of the Act civil penalties, restitution payments and court orders to prevent the person from continuing the fraud (A.R.S. §§ 44-1524; 44-1527; 44-1530; and 44-1531.02).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires an operator to disclose in a clear, conspicuous, easily readable and understandable manner, and in the customer's chosen language, all relevant terms and conditions that are generally associated with the products, services and activities of the cryptocurrency kiosk operator and virtual currency.
2. Requires an operator to receive acknowledgement of receipt of all required disclosures through confirmation or consent from a customer.
3. Requires an operator to provide two outlined disclosures separately in a font that contrasts with the background where the written disclosure appears and requires the customer to accept the disclosures prior to executing a cryptocurrency kiosk transaction (transaction).
4. Prescribes information that must be relayed to the customer through the disclosure warnings, including methods to identify consumer fraud, the irreversible nature of virtual currency fraud and instructions to contact law enforcement if a customer believes they are the subject of fraud.
5. Requires an operator, on completion of a transaction, to provide a physical or digital receipt in the customer's chosen language that contains:
a) the operator's name and contact information, including a telephone number to answer questions and register complaints;
b) the state and local law enforcement or government agency that receives complaints for fraud;
c) the type, value, date and precise time of a transaction, the transaction hash and each applicable virtual currency address;
d) the name and contact information of the sender;
e) the name, contact information and virtual wallet number of the designated recipient;
f) any fees charged for a decentralized stablecoin token that is designed to maintain a value of the U.S. dollar (DAI);
g) the exchange rate of the virtual currency to the U.S. dollar;
h) a statement of the cryptocurrency kiosk operator's refund policy; and
i) any additional information that a government authority may require.
6. Requires an operator to use blockchain analytics and tracing software to help prevent transfers to virtual wallets known to be affiliated with fraud.
7. Allows a relevant government authority to request evidence that an operator is using blockchain analytics.
8. Requires all operators to take reasonable steps to detect and prevent fraud, including establishing and maintaining a written anti-fraud policy and conforming to federal Know Your Consumer laws and Anti-Money Laundering laws.
9. Prohibits an operator from accepting transactions exceeding $2,000 USD in cash or virtual currency equivalent in one day from a new Arizona customer through one or more kiosks.
10. Requires an operator to ensure that a kiosk does not accept or dispense more than $5,000 in a single day for a single existing customer in connection with cryptocurrency services.
11. Defines new customer as a consumer transacting at a cryptocurrency kiosk in Arizona who has been a customer of an operator for fewer than 72 hours.
12. Defines existing customer as a consumer transacting at a cryptocurrency kiosk in Arizona who has been a customer of an operator for more than 72 hours.
13. Stipulates that all individuals or entities subject to these requirements are considered new customers on the general effective date for compliance purposes.
14. Stipulates that a new customer automatically converts to an existing customer 72 hours after becoming a new customer.
15. Requires operators performing business in Arizona to provide live customer service at all times, and prominently display a toll-free number on the cryptocurrency kiosk or the kiosk screens.
16. Requires the AG to enforce this legislation and stipulates that any act or practice that violates prescribed requirements is an unlawful business practice.
17. Defines blockchain analytics, blockchain analytics and tracing software, cryptocurrency kiosk, cryptocurrency kiosk operator, transaction hash, virtual currency address and virtual wallet.
18. Becomes effective on the general effective date.
House Action
COM 2/18/25 DPA 9-0-0-1
3rd Read 3/4/25 50-8-2
Prepared by Senate Research
March 21, 2025
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