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Cryptocurrencies, also known as “virtual currencies” or “crypto”, have become a new form of electronic payment.
What is cryptocurrency?
Minnesota state law (MN Statutes Sec. 53B.69) defines “virtual currency” to mean a digital representation of value that:
- Is used as a medium of exchange, unit of account, or store of value.
- Is not money, whether or not denominated in money.
- The law also lists what virtual currency does not include.
Cryptocurrency has drawn in consumers who buy because of news and social media stories from other buyers, celebrities or social media celebrities, who claim earning millions of dollars from cryptocurrency. However, many people have lost significant amounts of money in this volatile system.
Before buying or using cryptocurrency, do your research. Some cryptocurrencies and related financial products may actually be fraud. Please be aware that buying cryptocurrencies and related financial products as a way to earn income can be extremely risky and may lead to fraud.
Limited state regulation of cryptocurrency
Cryptocurrency is not consistently defined or regulated in the way that investment securities are regulated. The Minnesota Department of Commerce regulates cryptocurrency transactions in these ways.
- Any individual or business who engages in virtual-currency exchanges such as places to buy or sell cryptocurrency, is required to be licensed in Minnesota with the Department of Commerce as a money transmitter.
- Money transmitters that exchange, transfer or store virtual currency (cryptocurrency) must comply with an extensive list of regulatory requirements to protect consumers. Cryptocurrency and virtual currency kiosk vendors must comply with other requirements to protect customers from being defrauded by providing disclosures, limits on daily transactions, and potential refunds on new customer transactions.
Check to see if the company is licensed in Minnesota as a money transmission business. You can check to see whether a company is licensed here.
What is a Cryptocurrency Kiosk?
Kiosks are similar to your traditional ATM but focus only on cryptocurrency-related transactions. Many cryptocurrency kiosks exist in gas stations, check cashing establishments, and grocery stores.
You can use a kiosk in the same way you use your cryptocurrency wallet on a cryptocurrency-related app.
Minnesotans may be lured by scammers to use a kiosk to transfer money to a wallet as a way for the scammers to steal their money and disappear without a trace. Often, these requests to transfer money are urgent in nature in an attempt to prompt the person to act quickly.
Kiosk operators are also required to have a money transmission license. Before using a machine, check to see if the operator has a license here.