Bill Description: Senate Bill 1333 would create a new regulatory structure for virtual currency kiosks, impose licensing mandates, limit transactions, and impose penalties.

Rating: -6

Does it create, expand, or enlarge any agency, board, program, function, or activity of government? Conversely, does it eliminate or curtail the size or scope of government?

Senate Bill 1333 would create Chapter 54, Title 28, Idaho Code, titled the “Virtual Currency Kiosk Fraud Prevention Act.” 

This new regulatory structure would empower the Department of Finance with broad oversight over virtual currency kiosks and their operators, including mandatory licensing, data collection, and on-demand reporting. Operators would be required to submit detailed quarterly and annual reports and provide transaction data within days, effectively turning private businesses into extensions of state surveillance. 

The information-sharing provisions would allow inter-agency data exchanges on “reasonable suspicion” of fraud, bypassing traditional warrants or due process. This would expand bureaucratic authority without clear limits, and potentially lead to mission creep where the data is used for unrelated enforcement such as tax audits or federal inquiries. 

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Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?

The act would impose a host of regulations on virtual currency kiosk operators, including detailed reporting and data retention requirements. Operators would also be required to provide a long list of mandatory disclosures, some of which create an unrealistic and unwarranted perception of danger, including the statement, “WARNING: this technology can be used to defraud you.”

Operators would be required to provide “live customer service at a toll-free number seven (7) days a week” from, “at a minimum, 8:00 a.m. to 8:00 p.m.” 

The act dictates the precise content of transaction receipts.

Under the guise of “preventing fraud and money laundering,” the act would prohibit an operator from “accepting from or dispensing to a new customer an amount that is more than two thousand dollars ($2,000) in United States currency, or its equivalent in virtual currency, during any twenty-four (24) hour period.” It would also be required to limit cumulative transactions to a total of $10,000 within 30 days, and to delay the settlement of a new customer's first virtual currency kiosk transaction for 72 hours.

The act would require the operator to provide “transaction fee refunds” under a variety of circumstances, including “if such user experiences fraud with respect to such transaction.” The refund would be required “notwithstanding any acknowledgment that a user may have made prior to finalizing such transaction.”

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Does it increase barriers to entry into the market? Examples include occupational licensure, the minimum wage, and restrictions on home businesses. Conversely, does it remove barriers to entry into the market?

The act would say that, “in order for an operator to engage in or hold itself out as being able to engage in a virtual currency kiosk transaction, such operator must be a licensed money transmitter pursuant to the provisions of chapter 29, title 26, Idaho Code.”

It also says, “The department may request evidence from any virtual currency kiosk operator of its current use of blockchain analytics as part of the operator's registration and maintenance of a money transmitter license.”

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Does it violate the principle of equal protection under the law? Examples include laws that discriminate or differentiate based on age, gender, or religion or which apply laws, regulations, rules, or penalties differently based on such characteristics. Conversely, does it restore or protect the principle of equal protection under the law?

Virtual currency kiosks are in competition with various online platforms and exchanges that allow for buying, selling, and trading cryptocurrency, but the provisions of this act apply only to virtual currency kiosks, putting them at a competitive disadvantage. 

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Does it directly or indirectly create or increase penalties for victimless crimes or non-restorative penalties for non-violent crimes? Conversely, does it eliminate or decrease penalties for victimless crimes or non-restorative penalties for non-violent crimes?

The act would deem any violation “an unfair and deceptive practice in violation of the Idaho consumer protection act, chapter 6, title 48, Idaho Code.” It would give the Attorney General authority to “undertake any and all actions authorized by the Idaho consumer protection act to investigate and enforce a violation of this chapter.”

Additionally, “A person harmed by a violation of this chapter may initiate a civil action and may seek remedies pursuant to section 48-608, Idaho Code.”

If an operator violates the act, he “shall be subject to revocation of such operator's money transmitter licensure pursuant to the provisions of chapter 29, title 26, Idaho Code”; and if he “willfully and knowingly” violates the act, he “shall be guilty of a misdemeanor and, upon conviction, may be sentenced to pay a fine not exceeding one thousand dollars ($1,000).”

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Does it violate the spirit or the letter of either the United States Constitution or the Idaho Constitution? Examples include restrictions on speech, public assembly, the press, privacy, private property, or firearms. Conversely, does it restore or uphold the protections guaranteed in the US Constitution or the Idaho Constitution?

The act would violate numerous constitutional principles, including due process, by interfering with freedom of contract. It would require, among other things, a virtual currency kiosk operator to refund fees, even if the user explicitly agrees to conduct the transaction and acknowledges that transactions are irreversible and fees are non-refundable. 

The act also compromises privacy, requiring operators to collect and retain data, and to “provide any transaction and user information requested by the department, including with respect to any transactions attempted but denied.”

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