On March 11, the South Dakota governor signed into law Senate Bill 98, which aims to prevent virtual currency kiosk fraud. The law requires all virtual currency kiosk operators in the state to hold a money transmission license and imposes operational requirements and restrictions, including a daily transaction limit of $1,000 and a 30-day limit of $10,000 per user. The law also caps direct and indirect charges at 3 percent of the transaction amount and requires operators to provide receipts listing all fees charged, the exchange rate, and applicable virtual currency addresses. The law also mandates that operators employ blockchain analysis software to block transfers to addresses connected to fraudulent activity and verify user identity with a government-issued identification card before accepting payment.

To further mitigate risk, the law requires operators to display prominent fraud warnings on kiosks, including advisories that users should not send money to anyone they do not personally know and should stop transactions if contacted by someone claiming to be a government agent, law enforcement officer, or family member requesting a deposit. Operators must issue a full refund to users, including all charges, within 72 hours of the user’s satisfaction of certain conditions if a transaction involves fraud. Among other requirements, operators must maintain live customer service between 8 a.m. and 10 p.m. local time, establish a dedicated line for law enforcement communications, comply with the BSA/AML, and file annual renewal reports detailing transaction volumes, complaints, refund data, and suspicious activity reports.