Bill Targeting Cryptocurrency Scams Advances In VA Senate

RICHMOND, VA — Members of the Senate Finance and Appropriations Committee voted unanimously Wednesday morning to advance a bill introduced by a Fairfax legislator that seeks to protect consumers from cryptocurrency fraud and money laundering scams.

"Senate Bill 389 is related to the crypto kiosk machines that are growing in Virginia and are targeting the elderly, immigrants and other vulnerable communities," the bill's sponsor, Sen. Saddam Salim (D-Fairfax), told the committee on Wednesday morning. "These are booths that you find at dollar stores, gas stations or anywhere else that allow you to turn your cash into cryptocurrency and then send it to somebody else."

Typically, scammers target people who are not tech-savvy and may not have access to banking, according to Salim.

"The scams themselves are often done the old fashioned way," he said. "You get a phone call pretending that a grandchild or somebody may be a victim of something, or they got arrested."

The scammer then directs the victim to put money in one of these kiosks, which converts that cash into cryptocurrency and spits out a code that the scammer will use to redeem the funds.

"At the current moment, we do not regulate the content that goes on these machines, the usage and all of that," Salim said. "What this bill would do is set guidelines to ensure that there's a disclosure to the consumer who's purchasing, to say there could be fraud that takes place, so that the individuals are protected and they can rethink those transactions."

If adopted, the bill would prohibit virtual currency kiosk operators from accepting transactions above specified daily and monthly limits. It would also set a maximum transaction charge of 18 percent and require operates to obtain a license, file annual and quarterly reports, provide certain disclosures, and take reasonable steps to identify and prevent fraud and money laundering.

"What Sen. Salim is doing is really good for protecting people, particularly in that first 14 days," said Sen. Ryan McDougle (R-Mechanicsville). "It makes sure that with the 48 hour hold, that if there is some fraud, that there's a timeframe for that to be returned."

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During committee testimony, Senate Majority Leader Scott Surovell (D-Mount Vernon) shared a story about his 72-year-old cousin from Roanoke who fell victim to one of these scams.

"She got a phone call that one of her family members was in jail and needed to be bonded out," he said. "She needed to put $15,000 in one of these crypto machines in order to pay his bond. She got ripped off and was unable to get her money back."

The committee voted 15-0 to recommend the bill for the first of three readings on the Senate floor, which could occur as early as Wednesday's regular session at 12 p.m.