South Dakota Considers New Protections for Victims of Cryptocurrency Fraud
PIERRE, S.D. — South Dakota is moving forward with a new piece of legislation that could offer stronger protections to individuals who lose money due to fraud involving virtual-currency kiosks. The South Dakota Senate recently passed Senate Bill 98, which would hold kiosk operators accountable for reimbursing victims of fraudulent transactions while also allowing them to charge up to 25% in transaction fees.
Republican Sen. Steve Kolbeck of Brandon, the primary sponsor of the bill, emphasized that the legislation is focused on consumer protection. “It is a consumer protection bill, and that’s what we want to focus on,” he said during the debate. According to Kolbeck, criminals are using cryptocurrency kiosks to steal millions of dollars from older Americans each year. However, he stressed that the bill is not intended to eliminate these kiosks but rather to add safeguards. “We don’t want to kill these things,” he said. “We want to put some bumpers on them.”
The bill passed the Senate with a strong vote of 31-2 and is now set to move to the state House of Representatives for further consideration. Republican Rep. Mike Weisgram of Fort Pierre is the lead sponsor in the House. The legislation aims to create a balance between protecting consumers and allowing businesses to operate within a reasonable framework.
During the Senate debate, Republican Sen. John Carley of Piedmont attempted to significantly weaken the bill by proposing an amendment that would have reduced the liability of kiosk operators. However, his proposal was rejected by nearly all senators. Carley argued that the bill could harm small businesses, calling it “a small-business killer.” He expressed concern that the requirement for operators to provide refunds could deter companies from setting up kiosks in South Dakota. “They’re going to say, why should I come to South Dakota and have these machines here?” he asked.
In contrast, Republican Sen. Mike Rohl of Aberdeen supported the bill, citing his own experience as a business owner. He explained that his bar often has to cover losses when a fraudulent credit card transaction occurs, even if the staff didn’t verify the transaction. “I get the letters all the time,” Rohl said. “If you’re a party to a fraudulent transaction, you are liable.”
Key Provisions of Senate Bill 98
- Liability for Kiosk Operators: Operators would be required to reimburse victims of fraud.
- Transaction Fees: The bill allows operators to charge up to 25% per transaction.
- Consumer Protection Focus: The legislation aims to safeguard individuals, especially vulnerable groups like older Americans, from financial loss due to fraudulent activity.
- Balancing Business Interests: While holding operators accountable, the bill also acknowledges the need for fair business practices.
Debate and Opposition
Despite the strong support for the bill, there were concerns raised about its potential impact on small businesses. Opponents argued that the added liability could discourage investment in cryptocurrency kiosks, which they see as a growing industry. However, supporters believe the benefits of consumer protection outweigh the risks.
As the bill moves to the House of Representatives, it will likely face further scrutiny and debate. The outcome of this process will determine whether South Dakota becomes a leader in implementing consumer-friendly regulations for cryptocurrency kiosks.