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Michael Seymour works for Luxolo Financial in Portland.
Consumer protections at crypto kiosks are a key issue for lawmakers this session. Our elected officials are correct to pursue policies that make financial crime more difficult, but it is crucial to avoid creating a new problem in place of the issue at hand. Unfortunately, the effort is off to a rocky start with two bills that I believe unfairly limit kiosk provider operations in Maine and risk leaving Mainers with one less access point to digital assets.
Crypto kiosks, located in convenient spots like grocery stores and gas stations, provide a safe and secure way for consumers to use cash to buy crypto through legitimate transactions tailored to their needs. Popular with cash-reliant professionals like servers and those who prefer physical transactions, crypto kiosks make digital currencies more accessible. Additionally, crypto kiosks operate as a Money Service Business which means they are subject to existing federal laws that combat financial crime, like the Bank Secrecy Act (BSA) and the USA PATRIOT Act, as well as implementing their rules and regulations.
Policies proposed in LD 1205 and LD 1339 that I believe unfairly obstruct kiosk providers’ ability to fully offer services in Maine by limiting transactions to $1,000, imposing fee caps, and mandating refunds. Mandatory refunds are completely untenable and discordant with the nature of cryptocurrency. Once a cryptocurrency has been sent to another wallet it can not be retrieved, recalled or revoked; it is final settlement. If kiosk operators are required to refund dollars to users, they will likely never be compensated for their losses. This risk alone could shut down the entire network of these services within Maine.
Not only could these proposals push good-faith operators out of business, but they also likely won’t actually deter bad actors from separating people from their hard-earned money. In fact, restrictive transaction limits can hinder the ability of companies to file suspicious activity reports based on the requirements under federal law.
Proponents of these bills, like Maine’s AARP chapter, vaguely suggest such actions will protect consumers from scams at kiosks. However, little in AARP’s testimony explains exactly how policies in LD 1205 and LD 1339 will stop criminals behind the scams. Perhaps AARP should instead invest its resources in educating its members on the risks of these scams.
Instead of rushing forward with this attack on Mainers who rely on crypto kiosk services, legislators should instead implement policies that truly harden kiosks against criminals. I think the ideal legislation would utilize modern technologies and tried and true practices of successful businesses to meaningfully fight back against crime.
Requiring blockchain analytics at kiosks needs to be a top priority for drafting a better bill. Doing so will, I believe, offer comprehensive data points about all transactions at the kiosk, which helps block transactions to high-risk digital wallets belonging to scammers. Blockchain analytics also offer critical information to law enforcement officers who can use it to understand how and when criminals will strike.
Additionally, I think revised legislation needs to mandate that all kiosks are licensed with Maine’s government, display anti-scam warnings, and deploy live customer service representatives who can step in to stop a scam. Each of these steps can add an extra layer of resistance to carrying out a scam. Just ask reputable companies from other industries like Amazon and PNC that follow similar protocols to keep customers safe. These are basic precautions most consumers regularly encounter when transacting with good-standing crypto kiosk operators that already implement these essential safeguards, but some providers have failed to invest in proper consumer protections, which is why this debate is happening right now.
Consumer protections at crypto kiosks should not come at the expense of Maine consumers who depend on this service either out of necessity or personal preference. At this moment, I fear our public officials risk transforming Maine into one of the most unfriendly crypto environments with LD 1205 and LD 1339. Nobody disputes the need for regulations, but they should focus on requiring practices at kiosks that are known to protect consumers and increase resilience to attacks from criminals. Passing bills that jeopardize this entire industry’s existence in Maine is not the solution.