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On September 26, Arizona Attorney General Kris Mayes announced that the new Cryptocurrency Kiosk License Fraud Prevention Law took effect, establishing new safeguards for consumers using cryptocurrency ATMs. The law, enacted through House Bill 2387, amends the state's money transmission statutes to require enhanced disclosures, transaction limits, and refund rights for fraud victims.
The law was introduced in response to rising cryptocurrency ATM scams and losses reported among Arizona residents, particularly older consumers. It creates detailed obligations for kiosk operators to strengthen disclosure practices, limit daily transaction amounts, and provide refund rights for fraud victims.
Specifically, the new law includes the following key provisions:
- Mandatory disclosures and fraud warnings. Operators must clearly disclose all terms and conditions in the customer's preferred language and obtain acknowledgment before transactions. Two separate on-screen warnings must alert customers to common scam tactics, such as impersonation of government officials or law enforcement officers.
- Receipt and transaction information. Each transaction must include a physical or digital receipt listing the operator's contact information, transaction hash, wallet addresses, exchange rate, and refund policy.
- Fraud monitoring and analytics requirements. Operators must use blockchain analytics and tracing software to prevent transfers to wallets known to be associated with fraud and maintain written anti-fraud and AML/KYC compliance policies.
- Refunds for fraud victims. Operators must issue full refunds, including fees, to new customers who report fraud within 30 days and provide a law enforcement or Attorney General's report confirming the scam.
- Transaction and customer limits. Daily transaction limits are capped at $2,000 for new customers and $10,500 for existing customers. All users are treated as new customers on the law's effective date and transition to existing-customer status after ten days.
- Customer service and enforcement. Operators must provide 24/7 live customer service with a toll-free number displayed on all kiosks. The Attorney General may enforce violations as unfair or deceptive acts under the Arizona Consumer Fraud Act.
Putting It Into Practice: Arizona joins a growing number of states this year prioritizing consumer protections in the cryptocurrency kiosks and digital-asset space (previously discussed here and here). Cryptocurrency kiosk operators and money transmitters should review their interfaces, update consumer disclosures, implement fraud monitoring tools to ensure compliance with Arizona's new requirements as other states consider adopting comparable measures.
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