HB1642

SECTION 1. The legislature finds that digital financial asset transaction kiosks pose a significant risk to the financial security of the residents of the State. Digital financial asset transaction kiosks - also known as cryptocurrency Automated Teller Machines (ATMs) – enable a customer to buy and sell digital financial assets from a wallet or exchange. After providing the digital financial asset transaction kiosk with identification, which can range from a phone number to a scan of a government-issued ID, the customer enters the address of the wallet that will receive the purchased digital financial asset. The address could be the customer's own wallet or that of a third party. Finally, the customer inserts cash or a debit or credit card into the machine to finalize the purchase of the digital financial asset.

The legislature further finds that due to their ease of use, digital financial asset transaction kiosks are increasingly being used to facilitate scam payments. Typically, criminals target older individuals through unsolicited calls, posing as the government, bank, or the customer service representative of a company. Once contact is made, the scammer provides detailed instructions to the prospective victim, including how to withdraw cash from the victim's bank, locate the kiosk, circumvent a kiosk's safeguards, and deposit and send funds using the kiosk to the wallet the scammer controls. After providing the instructions, the scammer stays in constant contact with the prospective victim until the payment is completed.

The legislature also finds that after the scams are complete, victims face significant barriers to recovering their losses. First, once the transactions are complete, scammers quickly route funds to offshore platforms, which makes it very difficult to recover from the scammers. Second, the operators have consistently argued that, while the cash may be in the machine, the victim's money has already been transferred to the scammer, and the operator is unable to assist the victim in recovering the money.

The legislature finds that the proliferation of digital financial asset transaction kiosks and their increased use to facilitate scam payments has led to Americans losing millions of dollars. In 2024, the Federal Bureau of Investigation's Internet Crime Complaint Center received more than 10,956 complaints reporting the use of kiosks, with reported victim losses of approximately $246,700,000. That represents a ninety-nine per cent increase in the number of complaints and thirty-one per cent increase in reported victim losses from 2023. In the first six months of 2025, Americans lost around $240,000,000 in kiosk scams, a rate that is twice as high as in 2024.

Accordingly, the purpose of this Act is to prohibit the use of a digital financial asset transaction kiosk that accepts or dispenses United States currency by means of credit card or cash in exchange for a digital financial asset.

SECTION 2. Chapter 481B, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"§481B- Digital financial asset transaction kiosks; prohibition on deposits. (a) Beginning October 1, 2026, it shall be an unlawful practice under this chapter for an operator to own, operate, or manage in the State a digital financial asset transaction kiosk that accepts United States currency from a customer in exchange for a digital financial asset.

(b) Nothing in this section shall prohibit an operator from owning, operating, or managing in the State a digital financial asset transaction kiosk that:

(1) Accepts a digital financial asset from a customer in exchange for a different digital financial asset; or

(2) Accepts a digital financial asset from a customer in exchange for United States currency.

(d) As used in this section:

"Cash" means physical United States currency, both coins and paper currency.

"Digital financial asset" means a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, regardless of whether denominated in legal tender. "Digital financial asset" does not include:

(1) A transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant for legal tender, bank or credit union credit, or a digital financial asset;

(2) A digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform; or

(3) A security registered with or exempt from registration with the United States Securities and Exchange Commission or a security registered or exempt from registration under chapter 485A.

"Digital financial asset transaction kiosk" means an electronic information processing device that is capable of accepting or dispensing United States currency by means of credit card or cash in exchange for a digital financial asset.

"Operator" means a person who owns, operates, or manages a digital financial asset transaction kiosk located in the State."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1642
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII