Summary of Original Version

Establish Subtitle 13 of KRS Chapter 286 and create new sections thereof to regulate virtual currency kiosks; establish definitions; provide for enforcement by the commissioner of the Department of Financial Institutions; establish license requirements for virtual currency kiosks; require regulatory filings to be submitted to a nationwide licensing system registry; establish initial and renewal application processes and requirements, reporting, surety bond and tangible net worth, and change of control requirements for virtual currency kiosk operators; require the commissioner to promulgate administrative regulations to establish format, document submission, fee, and trade practice requirements for virtual currency kiosk operators; establish record retention requirements for persons required to be licensed as virtual currency kiosk operators; establish trade practice requirements relating to protection of resident assets, virtual currency kiosk transactions, prohibited practices, and fraud and information security compliance procedures; authorize the commissioner to conduct investigations and examinations; provide for the confidentiality of certain documents provided to the commissioner; authorize the commissioner to share, disclose, and report information and take other actions to assist in the commissioner's duties; require the commissioner to submit an annual licensing report to the Legislative Research Commission; establish due process requirements for adverse actions taken by the commissioner against licensees and other persons; establish requirements for the denial, suspension, or revocation of a license; authorize the commissioner to enter cease and desist orders and emergency orders; authorize the commissioner to order civil penalties against persons that violate the subtitle; require the commissioner of the Department of Financial Institutions to promulgate any required emergency and ordinary administrative regulations on or before January 1, 2027; EFFECTIVE, in part, March 31, 2027.

Summary of Amendment: Senate Committee Substitute 1

Summary Retain original provisions; except amend maximum daily transaction limit for existing virtual currency kiosk users to $10,500 per day; limit 72 hour hold or refund requirement to new virtual currency kiosk users; modify requirements for annual inflation adjustment to maximum daily transaction limit; make technical amendments.

Summary of Amendment: Senate Floor Amendment 1 -- S. Rawlings

Summary Retain original provisions, except modify licensing requirements for persons engaging in virtual currency kiosk business; modify maximum transaction limits for licensees; prohibit licensees from collecting virtual currency kiosk charges in excess of specified limits; require licensees to provide live customer service via a toll-free telephone number during operating hours, specified notices at virtual currency kiosks, and a paper or electronic receipt at the option of a virtual currency kiosk user; direct that a fraud victim's eligibility for a refund shall not be waived by required disclosures; require licensees to verify the identity of virtual currency kiosk users prior to accepting payment, provide refunds, provide a dedicated fraud communications line for law enforcement and the Department of Financial Institutions, and cooperate in fraud investigations.

Summary of Amendment: Senate Floor Amendment 2 -- S. Rawlings

Summary Retain original provisions, except modify licensing requirements for persons engaging in virtual currency kiosk business; add maximum transaction limit for transactions occurring within first 30 days; prohibit licensees from collecting virtual currency kiosk charges in excess of specified limits; require licensees to provide live customer service via a toll-free telephone number during operating hours, specified notices at virtual currency kiosks, and a paper or electronic receipt at the option of a virtual currency kiosk user; direct that a fraud victim's eligibility for a refund shall not be waived by required disclosures; require licensees to verify the identity of virtual currency kiosk users prior to accepting payment, provide refunds, provide a dedicated fraud communications line for law enforcement and the Department of Financial Institutions, and cooperate in fraud investigations.

Summary of Amendment: House Committee Substitute 1

Summary Retain original provisions; except modify and add definitions; establish exemptions; delete quarterly reporting requirement and add authorization by the commissioner to require certain regular reports; require kiosk locations and agents to be approved by the commissioner; permit regulatory filings to be submitted to a nationwide licensing system registry; modify initial and renewal application processes and requirements, reporting, bond and tangible net worth, change of control, and record retention requirements for virtual currency kiosk operators; permit the commissioner to promulgate administrative regulations to establish certain additional fee requirements for virtual currency kiosk operators; establish agent and permissible investment requirements for virtual currency kiosk operators; modify virtual currency kiosk transaction limits and disclosures, anti-fraud and information security compliance procedures, and refund requirements; authorize the commissioner to accept complaints; modify confidentiality of certain documents provided to the commissioner; require the commissioner to publish an annual report on the department's website; modify due process requirements for adverse actions taken by the commissioner against licensees and other persons; modify requirements for the denial, suspension, or revocation of a license; modify civil penalties; establish criminal penalties for false records and unlicensed activity; amend KRS 286.2-015 to authorize political subdivisions of this Commonwealth to enact and enforce ordinances, regulations, and resolutions pertaining to virtual currency kiosk business; create a new section of KRS Chapter 367 to provide that certain digital asset business-related violations shall be deemed a violation of, and subject to the remedies and penalties of, KRS 367.170; amend KRS 431.073 to authorize expungement of a Class D felony under the virtual currency kiosk business subtitle; create a new section of KRS 369.130 to 369.139 to define "hardware wallet provider"; require hardware wallet providers to provide live customer service during operating hours and to provide a mechanism for, and assistance with, resetting any password, pin, seed phrase, or other similar information necessary to access the contents of a hardware wallet; provide that a violation of the section is an unfair, false, misleading, or deceptive trade practices in violation of KRS 367.170; provide that the remedies and penalties are cumulative; authorize the Attorney General to promulgate administrative regulations for the proper enforcement of the hardware wallet provider requirements; EFFECTIVE, in part, April 30, 2027.

Summary of Amendment: House Committee Amendment 1 -- T. Smith

Summary Make title amendment.

Summary of Amendment: House Floor Amendment 1 -- M. Meredith

Summary Retain original provisions, except modify trade practice requirements for hardware wallet providers.

Summary of Amendment: House Floor Amendment 2 -- M. Meredith

Summary Retain original provisions, except modify trade practice requirements for hardware wallet providers.

Summary of Amendment: House Floor Amendment 3 -- T. Roberts

Summary Retain original provisions; except delete certain trade practice requirements for hardware wallet providers.

Statutes affected:
House Committee Substitute 1: 431.073