HB 1268
In CommitteeHouse
Virtual currency kiosks
Concerning virtual currency transaction kiosks.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill brings virtual currency transaction kiosks under Washington’s existing money transmitter licensing and supervision framework, requiring operators to be licensed, meet financial and compliance standards, and provide clear disclosures and receipts to customers. It also establishes rules for business termination and customer fund protection.
- Virtual currency kiosk operators are now deemed money transmitters and must obtain a license from the Washington Department of Financial Institutions.
- Operators must provide clear, written disclosures before each transaction—including a bold warning that losses from fraud or errors are not recoverable and transactions are irreversible.
- Operators must meet minimum tangible net worth requirements ($10,000 per $1M in annual transaction volume, capped at $3M, or $100,000 if storing digital assets), appoint a full-time chief compliance officer, and implement anti-fraud and know-your-customer (KYC) procedures.
- Operators must provide customers a detailed receipt after each transaction, including transaction ID, fees, exchange rate, and customer and wallet identifiers.
- Operators must submit a winding-down plan upon request and follow strict procedures—including 30-day advance notice, customer notifications, and full refund of customer funds—before terminating business operations.
- Kiosks must display material risks (e.g., no government insurance, volatility, fraud risks, irreversible transfers) and require customer acknowledgment before completing a transaction.
Who is affected
- Virtual currency kiosk operators — Operators of virtual currency kiosks in Washington must now obtain a money transmitter license, comply with new operational and compliance requirements (e.g., KYC, chief compliance officer, net worth standards), and follow specific procedures for business termination and customer fund handling.
- Kiosk customers — Customers using virtual currency kiosks will receive clearer disclosures about fees, risks (e.g., volatility, fraud, irreversibility), and transaction details—including a bold warning about non-recoverable losses—and must receive a detailed receipt after each transaction.
- Washington Department of Financial Institutions — The Washington State Department of Financial Institutions will gain expanded authority to regulate and supervise virtual currency kiosk operators, including licensing, examinations, enforcement, and requiring winding-down plans.
- Consumers with funds held by kiosk operators — Consumers who hold funds with kiosk operators may benefit from stronger protections, including guaranteed access to their funds during business closure or termination and clearer accountability from operators.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
Mandatory bold warnings and detailed disclosures—including explicit statements that losses are unrecoverable and transactions are irreversible—help protect consumers, especially vulnerable populations like seniors and non-English speakers, from fraud and uninformed losses.
consumer protectionPeopleRef: Sec. 2(4), Sec. 2(3)(a)–(h), Sec. 3(2)(b)–(c)The requirement that operators refund all customer funds before terminating operations—coupled with detailed winding-down plans—ensures consumer funds are protected if a kiosk operator goes out of business, reducing the risk of lost savings among low-balance users.
FinancialPeopleRef: Sec. 3(2)(d), Sec. 3(1)(c), Sec. 3(2)(a)KYC and transaction monitoring requirements—including blocking sanctioned wallets and post-transaction risk monitoring—help reduce kiosk use in money laundering and fraud schemes, protecting communities disproportionately targeted by crypto scams.
Public SafetyPeopleRef: Sec. 2(3)(a), Sec. 3(3)(a), Sec. 3(3)(e)Bringing kiosk operators under the money transmitter licensing framework subjects them to state supervision and enforcement authority, enabling proactive oversight and quicker response to misconduct—something previously unavailable in this largely unregulated space.
consumer protectionPeopleRef: Sec. 2(1), Sec. 1(3)Mandatory post-transaction receipts—including transaction IDs, fees, exchange rates, and wallet identifiers—empower users to verify transactions, dispute errors, and track activity, especially helpful for people without banking relationships who rely on kiosks.
consumer protectionPeopleRef: Sec. 4, Sec. 2(2)(a)–(b)
Potential Concerns (5)
The bill imposes new licensing, compliance, and operational requirements—including $10K–$3M net worth thresholds, full-time chief compliance officers, and third-party blockchain analysis—that significantly raise fixed costs for small kiosk operators, potentially forcing many out of business or preventing new entrants.
Business & EmploymentRef: Sec. 1(3), Sec. 2(1), Sec. 4Mandatory live telephone support during operating hours and full-time compliance staff increase labor and overhead costs disproportionately for small operators, reducing profitability and potentially shrinking service availability—especially in rural or lower-income areas.
Business & EmploymentRef: Sec. 2(3)(h), Sec. 2(4), Sec. 3(3)(f)While the bill aims to reduce fraud, requiring customers to acknowledge risks *after* they’ve inserted cash—especially at kiosks used by non-English speakers or people with low financial literacy—may not meaningfully improve decision-making and could create a false sense of protection without reducing actual victimization.
Public SafetyLean peopleRef: Sec. 2(4), Sec. 2(3)(a)–(h), Sec. 3(3)(d)The requirement to use third-party blockchain analysis tools and post-transaction monitoring may favor large operators with existing compliance infrastructure, consolidating the market and reducing competition—potentially limiting kiosk access for low-income users in underserved neighborhoods.
Business & EmploymentLean peopleRef: Sec. 3(3)(d), Sec. 3(3)(f)The winding-down requirements—including 30-day advance notice and full refund of customer funds—impose significant operational and liquidity burdens on small operators, increasing the risk that they will exit the market entirely rather than comply, thereby reducing consumer access to services.
FinancialPeopleRef: Sec. 3(2)(d), Sec. 3(1)(a)–(e)
Who Is Most Affected
Small kiosk operators—especially sole proprietors or local entrepreneurs running one or two machines—face high fixed costs (compliance officer, net worth, third-party tools) that may exceed profits, forcing exit from the market or reduced service hours/locations.
Low-income and vulnerable users—many of whom use kiosks because they lack bank access—gain stronger fraud protections and clearer disclosures, but may face reduced kiosk availability as operators exit the market.
Large national or regional kiosk operators with existing compliance infrastructure and capital reserves are best positioned to absorb new requirements and may gain market share as smaller competitors exit.
The Department of Financial Institutions gains expanded authority and oversight capacity, enabling more effective enforcement against bad actors and better data collection on this emerging sector.
Law enforcement and consumer protection agencies benefit from improved data flows (KYC, transaction logs, compliance reports) that aid investigations into crypto-related fraud and money laundering.