Current through Register Vol. 46, No. 52, December 24, 2024
(a)
Disclosure of material risks. As part of establishing a relationship with a
customer, and prior to entering into an initial transaction for, on behalf of,
or with such customer, each Licensee shall disclose in clear, conspicuous, and
legible writing in the English language and in any other predominant language
spoken by the customers of the Licensee, all material risks associated with its
products, services, and activities and Virtual Currency generally, including at
a minimum, the following:
(1) Virtual Currency
is not legal tender, is not backed by the government, and accounts and value
balances are not subject to Federal Deposit Insurance Corporation or Securities
Investor Protection Corporation protections;
(2) legislative and regulatory changes or
actions at the state, federal, or international level may adversely affect the
use, transfer, exchange, and value of Virtual Currency;
(3) transactions in Virtual Currency may be
irreversible, and, accordingly, losses due to fraudulent or accidental
transactions may not be recoverable;
(4) some Virtual Currency transactions shall
be deemed to be made when recorded on a public ledger, which is not necessarily
the date or time that the customer initiates the transaction;
(5) the value of Virtual Currency may be
derived from the continued willingness of market participants to exchange Fiat
Currency for Virtual Currency, which may result in the potential for permanent
and total loss of value of a particular Virtual Currency should the market for
that Virtual Currency disappear;
(6) there is no assurance that a Person who
accepts a Virtual Currency as payment today will continue to do so in the
future;
(7) the volatility and
unpredictability of the price of Virtual Currency relative to Fiat Currency may
result in significant loss over a short period of time;
(8) the nature of Virtual Currency may lead
to an increased risk of fraud or cyber attack;
(9) the nature of Virtual Currency means that
any technological difficulties experienced by the Licensee may prevent the
access or use of a customer's Virtual Currency; and
(10) any bond or trust account maintained by
the Licensee for the benefit of its customers may not be sufficient to cover
all losses incurred by customers.
(b) Disclosure of general terms and
conditions. When opening an account for a new customer, and prior to entering
into an initial transaction for, on behalf of, or with such customer, each
Licensee shall disclose in clear, conspicuous, and legible writing in the
English language and in any other predominant language spoken by the customers
of the Licensee, all relevant terms and conditions associated with its
products, services, and activities and Virtual Currency generally, including at
a minimum, the following, as applicable:
(1)
the customer's liability for unauthorized Virtual Currency
transactions;
(2) the customer's
right to stop payment of a preauthorized Virtual Currency transfer and the
procedure to initiate such a stop-payment order;
(3) under what circumstances the Licensee
will, absent a court or government order, disclose information concerning the
customer's account to third parties;
(4) the customer's right to receive periodic
account statements and valuations from the Licensee;
(5) the customer's right to receive a
receipt, trade ticket, or other evidence of a transaction;
(6) the customer's right to prior notice of a
change in the Licensee's rules or policies; and
(7) such other disclosures as are customarily
given in connection with the opening of customer accounts.
(c) Disclosures of the terms of transactions.
Prior to each transaction in Virtual Currency, for, on behalf of, or with a
customer, each Licensee shall furnish to each such customer a written
disclosure in clear, conspicuous, and legible writing in the English language
and in any other predominant language spoken by the customers of the Licensee,
containing the terms and conditions of the transaction, which shall include, at
a minimum, to the extent applicable:
(1) the
amount of the transaction;
(2) any
fees, expenses, and charges borne by the customer, including applicable
exchange rates;
(3) the type and
nature of the Virtual Currency transaction;
(4) a warning that once executed the
transaction may not be undone, if applicable; and
(5) such other disclosures as are customarily
given in connection with a transaction of this nature.
(d) Acknowledgement of disclosures. Each
Licensee shall ensure that all disclosures required in this Section are
acknowledged as received by customers.
(e) Receipts. Upon completion of any
transaction, each Licensee shall provide to a customer a receipt containing the
following information:
(1) the name and
contact information of the Licensee, including a telephone number established
by the Licensee to answer questions and register complaints;
(2) the type, value, date, and precise time
of the transaction;
(4) the exchange rate, if
applicable;
(5) a statement of the
liability of the Licensee for non-delivery or delayed delivery;
(6) a statement of the refund policy of the
Licensee; and
(7) any additional
information the superintendent may require.
(f) Each Licensee shall make available to the
Department, upon request, the form of the receipts it is required to provide to
customers in accordance with Subsection
200.19(e).
(g) Prevention of fraud. Licensees are
prohibited from engaging in fraudulent activity. Additionally, each Licensee
shall take reasonable steps to detect and prevent fraud, including by
establishing and maintaining a written anti-fraud policy. The anti-fraud policy
shall, at a minimum, include:
(1) the
identification and assessment of fraud-related risk areas;
(2) procedures and controls to protect
against identified risks;
(3)
allocation of responsibility for monitoring risks; and
(4) procedures for the periodic evaluation
and revision of the anti-fraud procedures, controls, and monitoring
mechanisms.