HB1647

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 – commonly referred to 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, 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, various independent investigations have found that a significant portion of transactions on some machines, in some cases as high as ninety per cent, were fraudulent transactions. Therefore, these kiosks are abnormally dangerous and pose a significant threat to the financial safety of the residents of this State.

Accordingly, the purpose of this Act is to subject hosts of digital financial asset transaction kiosks to civil penalties for acts of fraud committed through the use of the digital financial asset transaction kiosk located on the host's premises.

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

"§481B- Digital financial asset kiosk; fraud; host liability. (a) A host of a digital financial asset transaction kiosk shall have a duty to supervise the use of the digital financial asset transaction kiosk to prevent acts of fraud being committed through the use of the digital financial asset transaction kiosk on the host's premises.

(b) Notwithstanding any provision in chapter 480 to the contrary, if an act of fraud is committed through the use of the digital financial asset kiosk on the host's premises, the host shall be fined $500, which shall be collected in the manner provided in section 480-3.1.

(c) In the case of hosts that enter into a contractual relationship with an operator to host the operator's digital financial asset transaction kiosk on the person's premises, this section shall apply to:

(1) Contracts to host an operator's digital financial asset transaction kiosk entered into on or after the effective date of this Act; and

(2) Beginning July 1, 2027, all contracts to host an operator's digital financial asset transaction kiosk in effect as of the day before the effective date of this Act.

(d) For purposes of 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.

"Host of a digital financial asset transaction kiosk" or "host" means:

(1) An operator, if the digital financial asset transaction kiosk is located on the premises owned or leased by the operator; or

(2) A person that is in a contractual relationship with an operator to host the operator's digital financial asset transaction kiosk on the person's premises.

"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.	1647
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII