§ 36a-613 — Virtual currency kiosks. Disclosures. Receipts. Fee and commission. Maximum daily transaction limits. Cancellation and refund. Requirements applicable to owners or operators.

Connecticut § 36a-613

• Jurisdiction: Connecticut
• Title 36a: The Banking Law of Connecticut
• Ch. 668: Nondepository Financial Institutions

Text

(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 subdivisions (2) to (9), inclusive, of this subsection 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) 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; (6) 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; and (7) Virtual currency transactions are irreversible and are used by persons seeking to defraud customers, including, but not limited to, a person impersonating a customer's loved one, threatening jail time, stating that a customer's identity has been stolen, insisting that a customer withdraw money from the customer's bank account and purchase cryptocurrency or alleging a customer's personal computer has been hacked. (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, using not less than twenty-four point 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 requirement that the owner or operator communicate to the customer what customer information may be disclosed to third parties; (5) The customer's right to receive a physical, printed receipt for a virtual currency transaction at the time of the transaction; and (6) Upon any change in the rules or policies of the owner or operator, the customer's right to consent to such changed rules or policies prior to performing any transaction after such change. (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 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) (1) 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: (A) The name of, and contact information for, the owner or operator, including, but not limited to, the owner or operator's business address and a customer service telephone number established by the owner or operator to answer questions and register complaints; (B) The name of the customer; (C) The type, value, date and precise time of such virtual currency transaction, and each virtual currency address; (D) The amount of such virtual currency transaction expressed in United States currency; (E) The full unique transaction hash or identification number; (F) The public virtual currency address of the customer; (G) The unique identifier; (H) Any fee charged, including, but not limited to, any fee charged directly or indirectly by the owner or operator or a third party involved in such virtual currency transaction; (I) The exchange rate, if applicable; (J) Any tax collected by the owner or operator for such virtual currency transaction; (K) A statement of the liability of the owner or operator for nondelivery or delayed delivery; (L) A statement of the refund policy of the owner or operator; (M) The name and telephone number of the Department of Banking and a statement disclosing that the owner or operator's customers may contact the department with questions or complaints about the owner or operator's virtual currency kiosk services; and (N) Any additional information the Banking Commissioner may require. (2) The receipt required under subdivision (1) of this subsection: (A) Shall be provided in (i) a retainable form, (ii) the English language, and (iii) the language principally used by the owner or operator of the virtual currency kiosk to advertise, solicit or negotiate, either orally or in writing; and (B) May be provided electronically if the customer requests or agrees to receive an electronic receipt. (f) The total amount of any fee and commission charged by an owner or operator of a virtual currency kiosk for a virtual currency transaction shall not exceed fifteen per cent of the amount of the virtual currency transaction. (g) There are established the following maximum daily virtual currency kiosk transaction limits: (1) Two thousand dollars for each new customer of a virtual currency kiosk; and (2) Five thousand dollars for each existing customer of a virtual currency kiosk. (h) The owner or operator of a virtual currency kiosk shall allow a new customer, upon the request of the new customer, to cancel and receive a full refund for any fraudulent virtual currency transactions that occurred not later than seventy-two hours after the new customer registered as a customer of such owner or operator if, not later than thirty days after the last virtual currency transaction that occurred during such seventy-two hour period, the new customer: (1) Contacts such owner or operator and a government or law enforcement agency to inform such owner or operator and government or law enforcement agency of the fraudulent nature of such virtual currency transaction; and (2) Files a report with a government or law enforcement agency memorializing the fraudulent nature of such virtual currency transaction. (i) Each owner or operator of a virtual currency kiosk shall: (1) Obtain a copy of a government-issued identification card that identifies each customer of such owner or operator; (2) Maintain restrictions that prevent more than one customer of such owner or operator from using the same virtual currency wallet; (3) Be able to prevent designated virtual currency wallets from being used at any virtual currency kiosk owned or operated by such owner or operator; (4) Use an established third party that specializes in performing blockchain analyses to preemptively perform such analyses to identify and prevent high risk or sanctioned virtual currency wallets from being used by customers at virtual currency kiosks owned or operated by such owner or operator; (5) Define, in such owner or operator's policies and procedures, a risk-based method of monitoring customers of such owner or operator on a post-transaction basis; (6) Offer, during the hours of operation of the virtual currency kiosks owned or operated by such owner or operator, live customer support by telephone from a telephone number prominently displayed at or on such virtual currency kiosks; (7) Identify and speak by telephone with any new customer over sixty years of age prior to such new customer completing such new customer's first virtual currency transaction with such owner or operator. During such communication, which shall be recorded and retained by such owner or operator, the owner or operator shall (A) reconfirm any attestations made by such new customer at a virtual currency kiosk owned or operated by such owner or operator, (B) discuss the transaction, and (C) discuss types of fraudulent schemes relating to virtual currency. Such owner or operator's approval of the transaction shall be dependent upon such owner or operator's assessment of such communication; (8) Identify and speak by telephone with any new customer attempting to perform a virtual currency transaction that exceeds an amount that has been predesignated by such owner or operator as a large transaction amount before such transaction may be completed. During such communication, which shall be recorded and retained by such owner or operator, the owner or operator shall (A) positively identify such new customer, (B) review such new customer's stated purpose of the transaction, and (C) discuss types of fraudulent schemes relating to virtual currency. Such owner or operator's approval of the transaction shall be dependent upon such owner or operator's assessment of such communication; (9) Designate and employ a chief compliance officer who shall: (A) Be qualified to coordinate and monitor a compliance program to ensure compliance with this section and all other applicable federal and state laws, rules and regulations; (B) Be employed on a full-time basis by such owner or operator; and (C) Not own more than twenty per cent of the virtual currency kiosk owner or operator that employs such officer; and (10) Use full-time employees to fulfill such owner or operator's compliance responsibilities under federal and state laws, rules and regulations.

Legislative History

(P.A. 23-82, S. 3; P.A. 24-146, S. 4.) History: P.A. 24-146 amended Subsec. (a) to delete former Subdiv. (5) re continued acceptance of virtual currency, redesignate existing Subdiv. (6) as Subdiv. (5), delete former Subdiv. (7) re risk of fraud or cyber attack, delete former Subdiv. (8) re technological difficulties, redesignate existing Subdiv. (9) as Subdiv. (6) and add new Subdiv. (7) re irreversibility of virtual currency transactions and use of such transactions to defraud, amended Subsec. (b) to delete former Subdiv. (4) re statements and valuations, add new Subdiv. (4) re disclosure of information, add “physical, printed”, replace “trade ticket or other evidence of” with “for” and add “at the time of the transaction” in Subdiv. (5) and add provision re upon any change in rules or policies of owner or operator and replace “prior notice of a change in the” with “consent to such changed” and “of the owner or operator” with “prior to performing any transaction after such change” in Subdiv. (6), amended Subsec. (e) to designate existing introductory language re receipts as Subdiv. (1), redesignate existing Subdiv. (1) as Subdiv. (1)(A), add “but not limited to, the owner or operator's business address and” and “customer service” in redesignated Subdiv. (1)(A), add Subdiv. (1)(B) re name of customer, redesignate existing Subdiv. (2) as Subdiv. (1)(C), add Subdiv. (1)(D) re transaction amount, add Subdiv. (1)(E) re transaction hash or identification number, add Subdiv. (1)(F) re virtual currency address, add Subdiv. (1)(G) re unique identifier, redesignate existing Subdiv. (3) as Subdiv. (1)(H), change “The fee” to “Any fee” and add provision re fee charged directly or indirectly in redesignated Subdiv. (1)(H), redesignate existing Subdiv. (4) as Subdiv. (1)(I), add Subdiv. (1)(J) re tax collected, redesignate existing Subdivs. (5) and (6) as Subdiv. (1)(K) and (L), add Subdiv. (1)(M) re contacting Department of Banking, redesignate existing Subdiv. (7) as Subdiv. (1)(N), add Subdiv. (2) re receipt requirements and receipts may be provided electronically, amended Subsec. (f) to replace provision authorizing Banking Commissioner to establish maximum fees with provision re amount of fee and commission shall not exceed 15 per cent of transaction, amended Subsec. (g) to replace transaction limit of $2,500 with transaction limits of $2,000 for new customers and $5,000 for existing customers, amended Subsec. (h) to delete provision re at owner's or operator's cost and within 72 hours after virtual currency transaction, add provisions re allowing cancelation and refund upon request of new customers, change “the virtual currency” to “any fraudulent virtual currency”, delete former Subdivs. (1) and (2) re cancelation and refund, add provision re allowing cancelation and refund for transactions that occurred not later than 72 hours after registration if new customer satisfies certain requirements not later than 30 days after certain transaction and add new Subdivs. (1) and (2) re requirements for cancelation and refund, added Subsec. (i) re requirements applicable to owners or operators of virtual currency kiosks and made technical and conforming changes throughout.