HB1642 SD1

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 or cryptoATMs – 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, information technology support, 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, scammers quickly route funds to offshore platforms once the transactions are complete, 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.

Furthermore, several independent investigations, including investigations by the attorneys general for the District of Columbia and Iowa, have determined that a significant portion of transactions – as high as ninety per cent – were fraudulent transactions. Therefore, these kiosks pose a significant threat to the financial safety of the residents of this State.

Accordingly, the purpose of this Act is to:

(1) Establish limits on transactions through digital financial asset transaction kiosks; and

(2) Require operators of digital financial asset transaction kiosks to:

(A) Use blockchain analytics and tracing software to prevent fraud;

(B) Make certain disclosures;

(D) Provide full refunds under certain circumstances;

(E) Hold new customer transactions for a period of at least forty-eight hours; and

(F) Provide live customer service and a dedicated communications line for the department of the attorney general, office of consumer protection, department of law enforcement, and county police departments.

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; daily cap; fraud; disclosures. (a) An operator shall not accept transactions from a single customer through a digital financial asset transaction kiosk of more than:

(1) $2,000 or the equivalent in digital financial assets per day; and

(2) $10,000 or the equivalent in digital financial assets in any thirty-day period;

provided that the transaction limits shall apply to each operator in the aggregate; provided further that no operator shall accept transactions exceeding the applicable limit for their respective time period.

(b) All operators shall use blockchain analytics and tracing software to prevent digital financial assets from being sent to a digital financial asset wallet known or likely to be affiliated with fraudulent activity at the time of transaction and to detect transaction patterns indicative of fraud or other illicit activities. Operators shall block transactions to digital financial asset wallets associated with overseas exchanges inaccessible to users in the United States. The attorney general, executive director of the office of consumer protection, director of law enforcement, and county police departments may obtain evidence from an operator related to the operator's current use of blockchain analytics.

(c) An operator shall disclose in a clear, conspicuous, and easily readable manner all relevant terms and conditions generally associated with the products, services, and activities of the digital financial asset transaction kiosk, including but not limited to transaction charges collected and exchange rates used by the operator.

(d) An operator shall display a warning on the digital financial asset transaction kiosk or on the screen of the kiosk, written prominently in bold type and provided separately from any other disclosure made pursuant to this section, in substantially the following form:

"WARNING: This technology can be used to defraud you. If someone asked you to deposit money in this machine and/or is on the phone with you and claims to be a:

(1) Government agent;

(2) Computer software representative;

(3) Bill collector;

(4) Law enforcement officer; or

(5) Anyone you do not personally know,

STOP THIS TRANSACTION IMMEDIATELY and contact your local law enforcement and digital financial asset transaction kiosk operator. This is a scam. NEVER SEND MONEY to someone you don't know."

(e) An operator shall disclose the material risks associated with digital financial assets and digital financial asset transactions to the customer at the digital financial asset transaction kiosk, including disclosures that inform the customer that digital financial assets:

(1) Are not issued or backed by the United States government and are not legal tender in the United States;

(2) Are not subject to protection by the Federal Deposit Insurance Corporation, National Credit Union Administration, or Securities Investor Protection Corporation; and

(3) May fluctuate significantly in value relative to the United States dollar.

(f) An operator shall disclose the following information to the customer at the digital financial asset transaction kiosk or the first screen of the kiosk:

(1) The name, address, and telephone number of the operator;

(2) The days, time, and means of contact a customer may utilize to contact the operator for assistance; and

(3) Any state and county law enforcement and relevant government agency for reporting fraud.

(g) Any disclosure made by an operator pursuant to this section shall not deprive a customer of receiving a refund.

(h) Upon completion of each transaction, the operator shall provide the customer with paper and electronic receipts in a retainable form. The receipt shall include the following information:

(1) The operator's name and toll-free customer service phone number;

(2) Relevant contact information for state and county law enforcement and any relevant government agency for reporting fraud;

(3) Type, value, date, and precise time of the transaction;

(4) Each applicable digital financial asset address and transaction hash where available;

(5) All charges;

(6) Exchange rate of the digital financial assets to United States dollars;

(7) The operator's refund policy;

(8) Any additional information as determined by the operator; and

(9) Any additional information required by the applicable state or county law enforcement or relevant government agency.

(i) When a customer reports a fraudulent transaction, the operator shall issue a refund to the customer in the full amount of all transactions paid by the defrauded customer, including but not limited to any transaction charges, at the time of the transaction, regardless of any acknowledgements the customer may have made before finalizing the transactions; provided that the customer:

(1) Has engaged in a transaction or transactions involving the digital financial asset transaction kiosk where fraud occurred, whether authorized or unauthorized;

(2) Contacted the operator to inform the operator of the fraudulent nature of the transaction or transactions at issue within ninety days after the last transaction occurred or after the customer became aware of the fraud; and

(3) Submitted a police report, government agency report, or sworn statement detailing the fraudulent nature of the transaction or transactions to the operator within one hundred twenty days after contacting the operator.

The refund under this subsection shall be paid in the originating currency of the transaction. The operator shall issue a full refund within seventy-two hours after being notified by the defrauded customer and receiving a copy of the police or government agency's report or sworn statement.

(j) All operators shall hold each digital financial asset transaction made by a new customer for a period of at least forty-eight hours, after which the operator shall complete the transaction. No operator shall allow a new customer to complete a digital financial asset transaction until the hold period has elapsed. During the hold period, the new customer may contact the operator to request the cancellation and full refund of the transaction and the operator shall provide a full refund pursuant to this section.

(k) All operators shall provide live customer service during operating hours and between the hours of 8:00 a.m. and 10:00 p.m. Hawaii Standard Time. The customer service toll-free number shall be displayed on the digital financial asset transaction kiosk or on the screen of the kiosk.

(l) All operators performing business in the State shall provide a dedicated communications line for the attorney general, office of consumer protection, department of law enforcement, and county police departments via a United States telephone number or electronic mail address. The dedicated communications line shall be used to facilitate law enforcement and government agency communications with the operator in the event of a fraud report from a customer. Upon request from a law enforcement or government agency, an operator shall provide its trace findings and provide blockchain analytics to assist the law enforcement or government agency in any investigative matters related to the potential fraud.

(m) For the purposes of this section:

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

"Customer" means any individual or entity that initiates, authorizes, or completes a transaction involving digital financial assets through a digital financial asset transaction kiosk, whether for the purpose of purchasing, selling, transferring, or otherwise exchanging digital financial assets.

"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" means a transaction conducted or performed, in whole or in part, by electronic means via a digital financial asset transaction kiosk or other means that facilitates or enables the purchase of digital financial assets through a product or application that directs the customer to remit payment in person, including through a clerk or other intermediary, for the purpose of completing the transaction.

"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.

"Digital financial asset wallet" means a software program or an application that stores digital financial assets.

"New customer" means a customer who has initiated, authorized, or completed the customer's first digital financial asset transaction involving a digital financial asset transaction kiosk within the past fourteen days.

"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 on July 1, 3000.

HOUSE OF REPRESENTATIVES	H.B. NO.	1642
THIRTY-THIRD LEGISLATURE, 2026		H.D. 1
STATE OF HAWAII		S.D. 1