House Standing Committee on Consumer Protection & Commerce

Good afternoon, everyone. We are convening the Committee on Consumer Protection and Commerce. It is Thursday, February 5, 2026 about 2pm in Conference Room 329. Just so everyone knows, the mics. If you haven't been in the hearing yet, the mics are now in the ceiling. So no mics in front of your face.

You're going to have to project and speak a little loudly. But we can hear you now from the front two rows at least of the audience. So if you're going to stand on your testimony from those two rows, you can try to do so.

If you don't hear yourself coming through the speaker above you, that means YouTube can't hear you either. So then you'll have to come to the middle and stand on your testimony there. Anything else? zero, they think of everything. Think of everything. So if you're whispering, then they're gonna. It might pick you up.

So if you're gonna whisper, either write something or you can kind of put your hand over your mouth. Just give me a heads up. All right. In order to allow as many people to testify as possible, there will be a two minute time limit per testifier.

If you reach your two minutes, I'll just kind of ask you to conclude. And if you don't, I'm gonna cut you off. For those on Zoom, please keep yourself muted and your video off while waiting to testify.

And after your testimony is complete, you can use the Zoom chat function, but it's going to just go to the technical staff. If you're disconnected unexpectedly, you can attempt to rejoin. I'll try to circle around and let you testify if time permits, but the Taos is not responsible for any bad Internet connections on the testifier's end.

In the event of a total network failure, we may need to reschedule the hearing or schedule a meeting for decision making at a later time and date. In that case, we will post an appropriate notice. Please avoid using any trademarked or copyrighted images. Last time we had someone bring a photo up to show us.

Please, please don't do that. Imagine it if you describe it. Please refrain from profanity or uncivil behavior. Such behavior may be grounds for removal, and that are all the rules. A lot of old hats in here. I don't think we'll have a problem. All right, today is kind of like a fraud day a little bit.

We may have another one. We've got a lot of fraud bills on the agenda and a couple of foreclosure ones. First up, we've got HB2227 relating to eviction records. My Vice Chair will be handling the testimony today. So. Vice Chair.

Hawaii association of Realtors. In person. Judiciary. Medical Legal Partnership. Okay. Okay. Is there anyone else in person or on Zoom who would like to testify?

Okay. Good afternoon, Chair, Vice Chair, Member of the Committee. My name is Ben Kreps. I'm at the Public First Law Center. We're a nonprofit dedicated to open government in Hawaii. We've submitted written comments on this measure.

We don't take a position on the policy that's proposed here, but we do want to point out and respectfully disagree with some of the opposition testimony that asserts that this measure conflicts with the First Amendment right of access to court records and proceedings.

So as far as we're aware, there isn't any cases that hold that the constitutional right of access includes access over the Internet. So what this bill does is it keeps records off the Judiciary's online database, Ecor Kokua, but the records would still be accessible in person.

So that's why it doesn't conflict with the First Amendment right of access, because the records aren't totally unavailable. They're just harder to get to. So we wanted to offer those comments and be available for any questions that. The Committee may have.

Anyone else in person or on Zoom.

Aloha. Mai Kkou, Chair and Members of the Committee. This is Daja Ostrowski here for the Office of Hawaiian Affairs. We wanted to submit testimony and support.

We see this similar to our criminal justice initiatives, where we're working on clean slate as well as other expungement, where we want to make sure that if someone prevails against their landlord and that means they win, they did nothing wrong. There's no writ issued. It is not something that prejudices their search for housing forever.

Basically, we see this as a measure to keep Hawaiians in Hawaii. And I did want to make some note addressing some of the testimony about access to justice and access to attorneys.

Actually, my experience previously as a legal aid attorney is that a lot of folks are just able to get some of those attorney access when they show up in court.

There is the Access to Justice room in which legal aid is there, and they can pass it to an attorney, and any legal aid attorney will have access to a Jeffs account, which is one of the concerns that the judiciary raised. So I did want to point that out. We're here to answer any questions.

Anyone else in person or on Zoom who'd like to testify on HB2227.

Okay. Members, any Questions? Yes, for.

Excuse me, Chair for Public First. Thank you. Is there any precedent for any other. Kind of judicial documents or court documents that's kept off of the online database. But held in paper form?

Yeah, definitely. So we cite a case in our written testimony at State vs Rogan. And so that's where the Hawaii Supreme Court looked at an expungement statute that gave the court the option of either sealing records or keeping them offline.

So the court said, look, if we're forced to seal, then that's going to run into the First Amendment. Judges have to make a case by case determination. We can't automatically seal records, but the alternative of removing records from Ikor Kokua, the Hawaii Supreme Court did bless in that case.

So there is some precedent for that here in this jurisdiction.

Okay. Actually, I don't know if there's anyone. Here to answer it. Have. Are either of you familiar with the Clean Slate Initiative? Can I ask you a question? I wanted to ask the judiciary this question, but we don't have anyone here because I. They raised in their testimony that.

That the civil and criminal court systems are different systems. But I. There are some parallels between the work that's being done around expungement and the kinds of operational challenges that this would face. Are you aware of?

I will jump in and say this. So the Office of Hawaiian Affairs does have a seat on the Clean Slate Initiative. And so we do have staff that are working with that. McKenna Woodward is the person that works on that from the Office of the Affairs. So she is. I'm the public Policy manager.

She's one of the advocates that I work with. So I do know that there have been concerns expressed by the judiciary about the expenses or money needed. From my understanding, that's just kind of a nominal expense. So they already allow folks to get that expungement when they.

If so, if someone has a criminal record, it's eligible to be expunged and removed from their record, then someone can petition for that. And so they have that process. The Clean Slate Initiative is kind of like this. It's talking about administratively identifying all of the cases and doing it.

They actually are already doing a pilot project in the Big Island to do this. This is what I know about. So there is other questions I think we could ask OHA. We're a huge advocate for saying that because of how prejudicial this is, the disproportionate impact on native Hawaiians.

We think it's a good policy decision to make sure that folks can have that expungement happen. And so that's kind of where our stance is.

And do you happen to be aware of what kinds of legislative resources and support or resources and support that were needed to get that going from the Legislature? And it's okay if you don't?

I do not. I think that is something they're working on now for acts. We can follow up with that. But I think from our perspective, it is not an insurmountable challenge. That's certainly something that should be done for policy's sake because then folks can get jobs and contribute.

Thank you. Any other questions?

I've got a question. You said something about the Access to justice. Did you refer to the Access to Justice rule?

Yes. So, yeah, that's what I'm talking about.

So I think there's some concerns and I do understand folks saying that if you're someone who gets a notice from your landlord that says you need to appear in court for an ejectment, whether for a lease violation or maybe not paying rent, folks sometimes will take that and say, I want to get an attorney.

And so the judiciary raised concerns that maybe that person who's looking for an attorney would go to an attorney and the attorney would not be able to open e court Kokua and get information about that person. I think when we're talking about low income individuals, they can always go to the Access to Justice Room at the court.

It is staffed for every case. In fact, most of the judges are very good that when you come for your return hearing on an eviction case, they send you to go talk to legal aid. All legal aid attorneys have access to JEFFS , which is that separate system for attorneys only.

And so if we're really trying to make a determination about folks, that is. Now I. So that's, that's my thought. Yeah.

Okay. I volunteer in the Access Justice Room. I didn't think about that. So you're saying that the systems we use, JEFFS , will still have the information on it, but the public system, JIMS, I think, which the companies scrape for information on tenants will not have that.

So if you're a registered attorney, you have a JEFFS account, you'll still be able to get that information. So if they were to just call me or whoever else is at the Access to Justice Room, we could use our JEFFS account to look it up and see.

Yes.

Yes. Yes, that's what it says.

Thank you.

Any other questions? Members seeing none.

Okay, let's move on to HB 1775 relating to foreclosures.

Hawaii State Bar Association Collection Law Section in opposition in Person Hawaii Credit Union League offering comments in person.

Good afternoon. Chair Vice Chair Stefanie Sakamoto on behalf. Of the Hawaii Credit Union League. We'll stand on our written comments just with concerns about the broader negative impacts on mortgage netting. Thank you.

Hawaii Bankers association offering comments on Zoom.

Chair Reisher Members of the Committee Tiffany Yajima on behalf of the Hawaii Bankers Association, we submitted comments on this measure. We have some concerns and offer some amendments for testimony. Thank you.

Anyone else in person or on Zoom would like to testify. Members, any questions.

For HBA? Tiffany.

So in your testimony you talked about overlapping requirements to from state and both federal. Wasn't that your testimony? I think that's the other. Zero, sorry, wrong testifier. We testified on that. Then is it the. Case they're not here? Never mind. Oh, it might have been collection. Yeah. Okay, no problem. Never mind.

All right, seeing no more testifiers, let's move on to HB 1560 relating to consumer protection.

Okay. DCCA Office of Consumer Protection with comments.

Good afternoon, Chair, Vice Chair, Members of the Committee, my name is Emma Olson for the Office of Consumer Protection. We will stand on our written testimony in support.

Coin flip in support on Zoom. America Digital Inc. In support on Zoom.

Good afternoon, Chair Marioshi and Vice Chair Grandinetti. My name is Patrick May. I'm the compliance officer for America Digital Inc. Doing business as America Bitcoin. We're here to support this measure. The shared wallet prohibition and refund requirements in these bills in this bill target real fraud indicators, something that we already do as a company which works.

So we're offering our testimony in support of this bill.

Thank you. Before we move on to the next testifier, I just asked our tech guys. They, they can't really hear you from the sides, unfortunately. So if you want to stay on the side, that's fine. You're going to have to speak real loud though or just kind of move towards more the center or more towards the front.

AARP Hawaii offering comments in person.

Hello Chair Matayoshi and Members. I'm Kayla E. Lopez, State Director for AARP Hawaii. AARP is a non profit, nonpartisan social impact organization dedicated to empowering people 50 and older to choose how they live as they age. So we advocate for kupuna most often, but also their family members.

We have 135 members across the state and on behalf of them we'd like to share our testimony and our concerns related to HB 1561. We do think as a measure combined with other safeguards, it'd be helpful to have some added opportunities like what's provided in 1560 as a standalone.

We do not believe it will help significantly in preventing people from being subject to scams. Many of the scammers are able to have people create wallets, move wallets. There's sometimes legitimate, depending on the families, people who do share a wallet.

So if the Committee does choose to move this forward, again we would be concerned if it were just on its own versus perhaps combined with some of the other measures in that's being proposed today. But again we have concerns about it being actually very useful. In in preventing scams. Thank you very much.

Anyone else in person or on Zoom, would like to testify on HB 1516.

Hello, Clara Wilson, on behalf of Coin Flip, sorry, I had trouble getting unmuted when you called on me earlier. Aloha. From Des Moines, Iowa, Coin Flip would like to express our support for House Bill 1560. Coin flip has already implemented internal controls to ensure that two people cannot use the same wallet.

This practice is called wallet pinning and ensures that a wallet is restricted to one person. Our terms of service require that a customer affirmatively acknowledges that they control the wallet they are using and sending money to. And we have even blacklisted customers when we have found out that they are sharing wallets with their family Members.

Accordingly, we support the contents of House Bill 1560. Thank you.

Thank you. Anyone else in person or on Zoom, Seeing none. Members. Any questions?

Sorry. For Coin Flip, what date approximately did you start wallet pitting for mandatory wallet pitting for your platform?

That's a good question. I don't know off the top of my head, but I'm happy to ask our operations folks who can get an exact date for you.

I don't need an exact date. Has it been maybe like at least a year, you think?

Yeah, I think it's probably somewhere around there. You know, the technology is ever evolving and it takes a while to implement well, but I would say about a year. Yes.

Okay. You said for wallet bidding, all they need to do is affirmatively kind of check a box or click yes on the screen that that's the. That's their wallet that they're using. Is that, is that the safeguard?

We also have an internal safeguard, so we will associate the person and the account that is registered at that machine with that wallet address. So although when you first come to a machine, you are agreeing that the money you are sending the wallet you're sending the money to is your wallet.

We will block that transaction on the back end if someone else with a different account comes to our machine trying to use that same wallet.

Okay. How easy is it to make a new wallet?

It depends on what provider you're using. Different providers have different requirements that spin a full gamut.

Okay. I mean, would it be fairly easy for one person to have, say, two wallets?

Yeah. Once again, depending on the. The service that you're using, it could be potentially, yes.

Okay, what, what disturbs me is that, and I will say I do appreciate Coin Flip working with us during interim. Your company really did try to. Put. Forth its best efforts, I think to have good Legislation come forward. I do appreciate that.

The disturbing thing for me is that in DCCA's testimony, they did name Coin Flip specifically as a company that the D.C. attorney General is going after, claiming that 90% of the transactions, or around 90% plus of the transactions going through were associated with fraud.

If the wallet pitting was already in place at that time, but the fraud is still occurring, that to me makes me less comfortable. So what I'm trying to see is whether you know where that statistic came from, what time period, and whether it did in fact overlap with the wallet pitting mechanisms that you have in place now.

Yes, thank you for the opportunity to respond to that. That lawsuit was initiated. The DC lawsuit was initiated against Athena Bitcoin. And that is a different company than Coin Flip. So that number is not associated with our.

Was it Iowa then?

There has been some allegations of fraud and a lawsuit from Iowa. The number is below 90%. Well below 90%. And I will say that number is in active litigation. So we completely disagree with that fraud statistic. Our third party blockchain analytics provider puts our illicit activity rate around 1%, which is in line with other traditional financial institutions.

So we look forward to defending that number. And I can't say much more, just being that the lawsuit is still ongoing.

Okay, no, you're right. That was my mistake. It was the Iowa Attorney General. The claim which you folks are disputing is 94% sent through Coin Flip ATMs were associated with fraudulent transactions. But I understand your Attorney General internal audit of yourself reveals only about 1%, is that correct?

That's not an internal audit. That's our third party blockchain analytics provider. So that's a company that law enforcement also uses to trace these transactions. They put our scam rate around that 1%. And like I said importantly, that's a third party not owned or controlled by Coin Flip.

Thank you, DCCA. Do you have any other comments on our Office of Consumer Sewer Protection? Do you have any comments on your testimony here for the Iowa or D.C. AG's claims? If you have anything to add. If not, then that's okay. Okay. Nothing further. Okay, thank you.

Any other questions?

Okay, let's move on to. HB 1642 relating to consumer protection.

Office of Consumer Protection and support.

Emma Olson, for the Office of Consumer Protection. We stand in our written testimony and strong support. Support. A ban is probably the best way to protect consumers from fraud. Thank you.

Thank you. Coin Flip in opposition on Zoom.

Coin Flip respectfully opposes House Bill 1642, which would ban Cryptocurrency Kiosks in Hawaii Kiosks provide a safe and regulated way for residents to access cryptocurrency using cash, which remains how many people, including unbanked and underbanked consumers, manage their finances day to day. For many communities, kiosks serve an important role in expanding financial access and consumer choice.

Even with the growth of online banking and mobile payments, not every consumer is comfortable using online exchanges. With the prevalence of online data hacking, many consumers do not want to link their bank accounts to an online exchange. Secondly, many people simply prefer a physical in person option. Similar to why people still visit bank bridges.

Kiosks function as a bridge between the cash economy and digital economy. Kiosks can also provide meaningful consumer protections for individuals who find online exchanges confusing or intimidating. Kiosks offer a step by step guided transaction flow with multiple prominent scam warnings before transaction is even completed.

Many kiosk operators like coin flip also offer 247 live customer service with staff who are trained twice a year in anti money laundering and scam identification where comparatively it is often impossible to contact live employees at online exchanges.

Rather than eliminate this option for Hawaii consumers, Coin Flip supports robust licensure and targeted regulatory safeguards that protect consumers, enhance transparency and remove bad actors from the market without restricting access for law abiding residents who rely on cash and prefer an in person option.

Thank you Bitcoin Depot in Opposition On Zoom.

My apologies. The individual that was going to testify. On behalf of Bitcoin Depot is unfortunately. Stuck at the airport. So Emmanuel Zibakalam here on behalf of Bitcoin Depot. We stand in our written testimony in. Opposition, but would like to work with the introducer as well as others on creating a regulatory framework that's comfortable for everyone.

Thank you. Thank you America Digital Inc. In Opposition on Zoom.

Chair Vice Chair Again, thank you for the opportunity. We're pleased to be with you and to share our thoughts and I guess just to begin speak for the company, we share the committee's goals here of reducing consumer harm and offering consumer protections that are reasonable and really strong.

We recognize that scams have become an increasing problem in this industry and certain actors have taken steps that are either slow or inadequate to address it.

From our perspective, for all the reasons that Clara from Coin Flip mentioned, we think there's a legitimate and sizable legitimate market for our services, but the value that it provides is going to be, is going to be minimized or it's not going to, it's not going to be appreciated.

If scams continue to be as prevalent as they are today. And I think it's, you know, on it's incumbent upon responsible operators to take reasonable steps.

And I think our company's done a great job being very aggressive in taking measures that are not prescribed by law, that are prescribed by our own moral sense of right and wrong to protect consumers.

And I think that there's a variety of regulatory measures that the Committee has at its fingertips which can take a big chunk out of scams while still offering this valuable and needed service to many of Hawaii's residents. So we're here to testify in opposition to 1642.

Thank you. AARP Hawaii offering comments.

Aloha again, I'm Kelly Lopez. AARP does not take a position on this legislation partly because we don't have policy specific to outright banning of cryptocurrency deposits.

That said, we, we very much appreciate the chair and those who introduced the legislation who clearly are concerned about the fact that hundreds of people in Hawaii, especially Kupuna, have in fact been scammed out of, in fact, in 2024, over $920,000 here in Hawaii were scammed specifically from the use of cryptocurrency ATMs.

So we do believe that rigorous oversight is needed. And with that in mind, again appreciate the desire to find a very comprehensive way of addressing the issue.

Arp, again, I think from our perspective, recognize that when a scammer, when someone is being scammed, the person on the other end of that phone line is using all their multiple experiences of scamming people to frighten the victim. They are on the phone and they are walked through those kiosks.

No matter what is being said about what all those measures are, all the questions, these people are frightened. They're just pushing buttons. They aren't even bothering to take time to read because they are so frightened that they have to get this done right away.

So the operator and the kiosks in our mind is not aren't the bad players, it's the scammers. The problem is that the kiosks, as they stand, there's no friction, no intervention. And Kupuna in particular, who again, keep in mind, have worked their entire lives to save. They have no more additional income that they're bringing in.

When those tens of thousands of dollars are lost, they can't recoup it. When they lose their home, they can't recoup it. We don't like that young people get scammed either, but they can hopefully be gainfully employed and earn some of that back. Kupuna cannot. I Appreciate. Rep. Matayoshi, your.

Your leadership in particular in understanding that this is really, in my mind, a pandemic. Thank you very much. An epidemic. Sorry.

Anyone else in person or on Zoom to test. Seeing none. Members, any questions? Okay.

Next we've got HB 1647 relating to consumer protection.

Office of Consumer Protection offering comments.

Hello. Emma Olson, for the Office of Consumer Protection. We will stand on our written testimony offering comments. We would just like to highlight that some of kiosks, some of the people who host kiosks might be small businesses and they might not understand the significant liability if they're responsible for civil penalties and refunds. Thank you.

Thank you. Coin flip in opposition on Zoom.

I appreciate the comments from the Office of Consumer Protection and would like to echo that Coin Flip. Respectfully opposes 1647 because it would impose liability on host locations that provide space for cryptocurrency kiosks.

Host businesses are not agents of the kiosk operator, and store employees are not equipped to monitor compliance with complex financial regulations or identify fraudulent activity. The bill appears vague as to what specific actions a host must take to prevent fraud and what standard would satisfy the law.

In practice, this would force third parties, in this case mostly store clerks, or what we're worried about, into a risk that they should not be expected to manage. As a result, House Bill 1647 would discourage businesses from hosting kiosks altogether, creating a de facto ban.

Coin Flip supports targeted enforceable safeguards that hold licensed kiosk operators accountable rather than shifting the enforcement responsibility to our host businesses. Thank you.

Thank you. Bitcoin Depot in opposition.

Hello, can you hear me?

Yes.

Yes, thank you. I just wanted to stand up and say we appreciate bringing attention to this issue. We want to

Could you identify yourself and somebody you're with, please.

Yes, I apologize. My name is Mike Geiselhert. I'm with Bitcoin Depot. We are standing in opposition to the bill.

We appreciate you all bringing attention to this issue, and we want to be good partners of finding a bill that makes sense to protect consumers while ensuring legitimate businesses like ourselves continue to operate.

With that said, I want to stand on my testimony that I submitted, but if you do have any questions, feel free to let me know.

Thank you. America Digital Inc. In opposition on Zoom.

Thank you. We will stand on our written testimony and reiterate some of the points Ms. Wilson made on behalf of Coin Flip. You know, we feel like it's an undue burden on hosts to be charged with and placed under liability for overseeing financial transactions that they're not trained or regulated or licensed to oversee.

They're not trained on scam methodologies, they're not trained on bsa, KYC laws. And placing the burden on them to insert themselves in a, in a kiosk transaction, I think is inappropriate. That's the company's view. You know, furthermore, this is all not to say that nobody should be responsible.

We believe this responsibility lies squarely on the shoulders of operators. And responsible operators are already doing the things that it takes to prevent scams, as mentioned in our written testimony, aggressively.

And so, you know, I think that there should be a burden of protecting scams, there should be a liability for scams, but I don't believe that hosts are the appropriate party to bear that burden. Thank you.

Thank you. AARP offering comments.

Aloha. Again, thank you for the opportunity to. Again, I think these bills together really work at trying to find a way to mitigate and ideally eliminate the fact that so many people are being scammed. Again, we aren't taking a position on this legislation because AARP does not have policy on it.

It's clear that it does provide some fiction. And at the same time, you know, again, I think if maybe like banks where tellers are being trained to in fact try to identify scams, maybe there's a way that that can happen.

We've seen situations where either a host employee has been able to help stop a scam or unwittingly helping to facilitate this gap. So it's worthy of, you know, again, trying to consider it.

But I, you know, again, we don't have policy on it, but really, again, appreciate trying to find some mechanism and ways to ensure that people in Hawaii are not losing hundreds of thousands of dollars. Thank you. Thank you.

Anyone else in person or on Zoom who'd like to testify? Seeing none. Members, Any questions?

Okay, let's move on to HB 2003 relating to digital financial asset transaction kiosks.

Office of Consumer Protection and Support.

Hello. Emma Olson for the Office of Consumer Protection. We will stand on our written testimony in support highlighting the amendments that we would want the daily and the monthly limit to both apply and for this to apply to every kiosk operator, not just each one individually.

Thank you. Available for questions. Thank you. Department of the Prosecuting Attorney, City and County of Honolulu in person.

Good afternoon, Chair, Vice Chair, Members of the Committee. My name is Bennet McFarland on behalf of the Prosecutor's Office for the City and County of Honolulu in support of House Bill 2003 with a small recommended fix. This bill addresses a growing and very real problem.

As you know, we've all been talking about this whole hearing involving digital asset kiosks. And basically scammers love kiosks. And our victims and our Kakuna, they're very vulnerable to them and they lose huge amounts of money fast.

Scammers pretend to be police, Irs, family and loved ones and they pressure people into using crypto kiosk and send money immediately. This Bill adds smart protection. It adds a daily and monthly limit, slowing down how much someone can lose. It requires clear warnings on the screen about common scams.

And it's going to force operators to track use tracking software so law enforcement can actually investigate. It requires refunds when fraud is reported quickly giving victims immediate relief. But we do recommend one small amendment and it's on page 199. We recommend that you change the OR to and because.

Because right now it says daily limits or monthly limits. We need both daily and monthly limits. This change would just a change in one word really make this an effective legislation. So this bill protects vulnerable people from scammers while still letting honest people use the technology. With that one work fixed, we strongly support it. Thank you.

Thank you AARP Hawaii and support.

Aloha Chair and Members. AARP stands in strong support of this legislation. We appreciate we had an opportunity before session to work with the Office of Consumer Protection and we especially appreciate their openness, if not willingness openness, to be one of the organizations, one of the entities that would deal with enforcement related to this particular piece of legislation.

Again, as you've heard, cryptocurrency ATMs are really just that. It's exploding in how it's being used by scammers. Again, the scammers are the real bad actors. The problem is the kiosks make it very easy to part kupuna or anyone from tens of thousands of dollars in a fell swoop.

A good example is Nationally there were 11,000 complaints reporting $250 million in losses, reflecting a 99% increase over 2023. We have seen similar high increase in losses since 2024. In 2025 alone, between January and November of 2025, that number was surpassed in the amount of loss. Again, it's having.

Our concern is we want to have legislation that we know will meet the needs of consumers, those who are involved in law enforcement. We want something that's going to pass. We cannot afford to have good legislation not passed this year. Another year is too late.

So we appreciate and hope that this body sees the Importance of moving HB 2003 forward available if you have questions.

Thank you. Thank you. Coin Flip in opposition on Zoom.

Unfortunately, House Bill 2003 relies on policy recommendations that create a false sense of consumer protection. The proposed transaction limits do not adequately account for existing federal anti money laundering and reporting requirements.

Under federal law, Coin Flip is required to file suspicious activity reports similar to those reports that banks and credit unions file for transactions of $2,000 or more and a currency transaction report for transactions above $10,000. These reports are maintained in a centralized database that supports timely and accurate law enforcement investigations.

Hawaii's proposed $2,000 daily transaction limit and $10,000 monthly aggregate limit would encourage those bad actors to split transactions across multiple operators. This is called stacking in order to avoid those state thresholds which undermine AML monitoring and make scams actually harder to detect. These limits would also reduce reporting if transactions are forced below federal CTR thresholds.

Kiosk operators or will not file these reports, they cannot file them, resulting in less information available to law enforcement. Lastly, the refund provisions found in House Bill 2003 are unprecedented for money service businesses. No other financial services product is subject to statutory refund requirements for authorized transactions like are proposed in this Bill.

Under Regulation E, consumers are entitled to refunds for unauthorized transfers, not for transactions that they authorized or participated in. Imposing this refund obligation solely on kiosk operators ignores the $9 billion total cryptocurrency fraud problem and that was from 2024. Data kiosks are less than 3% of that problem. So we have.

We take issue with the liability shifting and the blame that happens with those refunds because it doesn't hold anyone else accountable. Thank you.

Thank you. Bitcoin Depot in opposition on Zoom.

Hello. I am Mike Geiselhert. I'm a Government Affairs Manager at Bitcoin Depot. My perspective on this legislation is not shaped purely by my role in the industry, but my extensive background in homeland security where I help secure critical infrastructure from ransomware gangs and have a fairly long history of working in the crypto sector.

When we're talking about scams in this particular industry, we agree any scams are a problem. It ruins reputation, consumers are hurt. We agree that a number of things are needed to protect them. We believe rules of the road are required and we need to establish those.

While we agree with a majority of the consumer protections in the Bill, we agree with our peers at Coin Flip with a number of their concerns. As the ARP said just recently, the issue is the scammers and what we ask is to be treated similar to our peers in the financial institutions.

As we know, scams are complex and it doesn't just stop or start at the kiosk. It starts with the telecommunication companies. The banks have a hand in giving out loans without or giving out money without pushing back on the limits as well.

There's a number of people that have liability here and it is a bit odd to isolate kiosks, the only issue in this sector, especially as gift card scams and wire fraud continue to be the number one targets for fraud in this sector. Unfortunately, America is facing a huge issue of fraud and scammers across all sectors.

And as you heard, 3% of that number is at kiosk, over 80% is at centralized exchanges. And that's not bringing into account traditional financial scams.

I'd also like to add that we agree this Bill is a good starting point, but we ask that the ARP as well as the consumer protection and the sponsor of this Bill reach out to us so that we can work together to create a Bill that protects consumers while allowing legitimate users to continue to operate.

To give you a background, I worked in Ohio with the ARP to develop a compromise model that will protect consumers while allowing us to operate as well. It has refund provisions, transaction limits, everything that this Bill is asking for, but goes much farther than this current one.

That is all and I look forward to any of your questions.

Thank you. Hawaii Credit Union League in support. Members. Stephanie Sakamoto on behalf of the Hawaii Credit Union League will stand on our just the morning report. Thank you and America Digital Inc. And opposition on Zoom.

Thank you very much Chair and Vice Chair. We're glad to be with you and especially on this topic, eager to share our thoughts. We thank you for the opportunity to share thoughts earlier on 2003.

In particular, although our testimony was submitted in opposition, generally speaking we're in favor of many of the provisions that you've outlined in the Bill, including daily limits and refunds under certain contexts.

You know, just speaking from my experience as a compliance officer, you know, we take everything with a risk based approach and we identify that the largest moments of risk for consumers, especially elderly consumers, is within the first 48 hours of using a kiosk.

When you hear about these duress scams where someone's impersonating a law enforcement officer and threatening jail time, and the story always ends with go get money out of your bank and put it into a Bitcoin ATM for bail or for safekeeping if your account's been compromised. The stories change, but the end is always really the Same.

The common thread is that typically these duress scams are targeting folks really for a very limited period of time. And that's why I think our holding release program, as described in our testimony, is particularly effective.

Where any customer who comes into our kiosk and transacts more than $3,000 than their first 48 hours, those transactions are held by our institution until we can make outbound contact. Ms. Lopez from the AARP mentioned that the kiosks are neutral. Right. The scammers are the problem, but the kiosks are frictionless.

And scammers take advantage of the friction, frictionless nature of these transactions to scam folks and get money processed without any intervention. Our system provides a level of human intervention. We actually slow the process down. Right. These kiosks are attractive to legitimate users because they're automated and instant. That same feature set has become appealing to scammers.

And our goal is to intervene with every new consumer, whether they're being scammed or whether they're a legitimate consumer, to slow down the process, run them through a comprehensive script. It's run by a real human being.

It's on an outbound call, so a scammer can't spoof a customer's phone number, pretend to be the customer to, say, process the transaction. We found remarkable success with this program. It takes human resources, but in our view, it's the right thing to do.

And so, you know, all of this is a long winded way of saying that in particular, limits for low limits for new customers is something that we're aligned with and we think is an appropriate and responsible measure to take. And we do take issue with the 10,000 monthly limit.

We'd like to see that consumers who have demonstrated that they're using the product responsibly and legitimately have the opportunity to use it at a level that meets their demand. And if there are safeguards involved there, on a daily limit above $2,000, I think generally speaking, we're okay with that.

We've seen that model adopted in several other states where we operate and don't have any problem with that if that's what the Committee feels is necessary to produce and protect consumers, reduce scams. Other states have also adopted refund laws, which we're not supposed to.

Excuse me, you know, especially during these new customer periods where if someone's able to get through our system and do transactions within the first three days or a week and they call us within 14 days or 30 days and report a scam with a police report, we're Happy to provide a refund.

We think our system should be stopping those scams anyway and we're happy to bear responsibility, responsibility for that. So, you know, again, although our testimony formally was written in opposition, we generally are supportive of many measures in this Bill and we think that responsible operators should have no fear of being responsible for stopping scams.

If there's any questions, we'd be happy to answer, but that concludes my testimony. Thank you.

Thank you. Anyone else in person or on Zoom would like to testify? Okay. Just noting an additional 14 individuals who submitted written testimony and support Members. Any questions?

Yeah, For American Bitcoin, you said that you would refund them if it was scam. Do you mean refund them the full amount of the crypto that they purchased or do you mean refund them of the transaction fee?

The model in many other states where we operate is that the entire value of the transactions required to be refunded. We're able to aggressively stop scams to a point where that's really not a problem for our business, and we're supportive of that measure.

So we're in support of full refunds for a specific window of time where we think the risk is the highest. After that point. We've seen other states adopt measures where any fees that the company makes on a scam are refunded to the customer. We support that.

I think it creates the right incentive alignment structure where an operator is not incentivized to look the other way and allow scam transactions knowing that they're going to pocket a fee, you know, if they're going to be forced to return the fee.

I think it creates a great incentive alignment where, you know, you better stop it because you're not going to make any money on it. You're just going to create problems and not protect consumers. So that's, that's generally speaking, our position here. What other states require full refunds of the full transaction?

I'd have to prepare a response for you on that. I know it's a number of states that we, that we operate in our, you know, already, you know, off the top of my head, I know that. I believe that's the case in arc.

Oklahoma, Arkansas, Minnesota have these models where for the first three to seven days, the full value of transactions processed by an operator with daily limits of two or 3,000 dollars, however much a customer can get through during their defined new customer period, are required to be refunded in full. Thank you.

Any other questions?

Okay, let's move on to HB 1640 relating to financial exploitation.

Department of Human Services offering comments on Zoom.

Vice chair, Members of the Committee, Thank you.

Bankers association offering comments.

We do prefer the language already in statute at 412-3142.

Thank you. Hawaii credit union league.

Appreciating the impact of the measure since we have General concerns about the redundancy of the regulation. Thank you.

Thank you. Anyone else in person or on Zoom would like to testify? Seeing none. Members, any questions?

Okay, last, last item on the Agenda, HB 2198 relating to prediction markets.

Department of the prosecuting attorney of the city and county of Honolulu ends up.

Good afternoon Chair Matayoshi, Vice Chair grand Members of the Committee. My name is Steve Alm. I'm the Homeland Prosecutor. We're in strong support of Hospital 2198. Talk about being timely and I commend you for addressing the prediction markets. They are a real problem. They are gambling by any other name.

And sports betting has the potential to destroy sports and it has the potential to destroy young men and women. Research in the University of California San Diego found that 96% of online bettors lose. That means 96% of Hawaii residents would lose and the 4% that was winner typically cut off by the FanDuel or DraftKings or whoever.

You don't have the right to do it.

And research has shown lower income residents are most effective and given the Pareto principle, the 8020 rule that applies to gambling. So those who have a gambling addiction are going to be responsible for most of the betting. In a study in Connecticut, 7% of the bettors accounted for 70% the money bet.

And so that means any tax money Hawaii would make would be coming from the gambling. Does Hawaii really want to be in the addiction for profit business? I don't think so.

And just recently the prediction market betting of Governor Green's State of the State speech on whoever made that money on betting the Maduro of Venezuela would be out shortly.

And whether the whole White House spokesperson was improperly cutting short for time is really scary because that would things like this could really influence public policy and national events in a truly scary way. So whatever you folks can do, we would fully support in this area. Thank you.

Thank you. Stop Predatory Gambling and support on Zoom.

Good afternoon Chair, Vice Chair and Committee Members. My name is Les Bernal. I'm the national Director for Stop Predatory Gambling. We're a national nonprofit organization in all 50 states and we here today to testify on behalf of the members of Hawaii delegation of Stop Predatory Gambling. So it's appropriate when the Chair mentioned at the beginning the fraud.

The agenda today for this Committee hearing was about fraud bills. So it's very appropriate to have prediction markets in that, in that context because this is what you're talking about it's a huge financial scheme, ripoff scheme that's metastasized across the country. And we, as an organization, stop predatory gambling. We're presently.

We filed amicus briefs in three major federal litigation actions that are done by different states, are in three different circuit courts across the country. So this is being aggressively litigated as well.

So I say that because what you guys have done in Hawaii, the sponsors of this Bill, really, this is like a truly visionary bill that no one else is out in front on this like you guys are.

And I just need to recognize that we're involved all over the country, and we were looking for model legislation on prediction markets, and you guys really came up with it. And I just want to acknowledge that it's a very important bill and showed a lot of vision and leadership.

So we're using that and circulating amongst all of our Members across the country. And then to kind of wind down here the two or three things that emphasize about this issue, this is a blatant attempt, these prediction markets are a blatant attempt to evade Hawaii's laws on commercialized gambling. You know, and you don't need to spec.

No one needs to speculate that about that at all, because both DraftKings and FanDuel, which all of you know, have been aggressively lobbying in Hawaii to legalize online sports gambling, both of those companies are now in the prediction market business in states where they.

Where they couldn't get online gambling legalized, they have come in and are offering prediction market wagering, sports wagers. So whether Texas, Minnesota, you know, Hawaii, and so on. So that's. That reveals the kind of company values that those are. So kind of partner they would be if you ever legalize your business in their state. So.

But they're clearly gambling operators. That's. If you've been on these platforms, it's very obvious. And the last thing I'll say in the big picture and the reason why this issue matters so much is on the mainland, citizens there are losing $300,000 every minute to the institution of predatory gambling, to forms of gambling sanctioned by state governments.

$300,000 every minute. Both political parties are having this huge debate around affordability, how to make America more affordable. You and Hawaii are having this debate, how do we make Hawaii more affordable for everyday citizens?

This is an issue with citizens losing $300,000aminute on the mainland, and over the next five years, a trillion dollars of lost personal wealth to this institution. So Hawaii is a model for the country. The country needs to be more like Hawaii on on when it comes to the institution of predatory gambling.

And and we strongly support this Bill and hope you you'll pass it at lightning speed. Thank you.

Christine Autozaw in person in support, Marcus Oshiro.

Okay, My name is Marcus Oshiro and I served in the state House of representatives from 1994 to 2017. Let me say that I feel a sense of camaraderie with all of you sitting on that side of the table and me on this side of the podium. I will stand on my written testimony.

But while I have all of you, I want to add a few other elements to my public testimony. I think, number one, please take a look at the testimony submitted by Ms. Christine Aroz in the electronic format that you have before you.

There are, I think nine or 11 different articles and they pertain to this prediction market and they're quite descriptive and well worth your time. Couple other points. Keep in mind that Fand dual predicts, DraftKings predictions and fanatics market are currently available in many states and even states like Hawaii that do not permit sports betting or gambling.

Number three, for cowshi in 202589% or 90% of their revenue came through contracts of sports betting. So call it what you will, it's betting.

But all of you should be encouraged that the state of Hawaii, through its Attorney General under the direction of Governor Green, has involved the state in several key circuit court appellate court cases live today and one of them is in the materials in Ms. Autoza's submissions.

It's the U.S. district Court of Appeals, 3rd Circuit Kalshe X LLC vs. Mary Jo Flattery et al. 251922 June 17, 2025 arguing that it's a fundamental state constitutional right to control gambling and that Congress has not preempted that through the Commodity Exchange Commission or the Federal Trade Commission. I'll be here to answer any questions.

I submitted written testimony to the Chair, Vice Chair and the membership. I suggest two possible amendments. One, dealing with this auspicious august body and the work that it does. And number two, any of the military or operational information that might be circulating in our community because of our strong presence, armed services and military service.

So thank you very much. I'm happy to see some of my old colleagues. I won't point them out, but it's good to be here. It feels like home. Thank you. Thank you.

Anyone else in person or on Zoom would like to testify? Seeing none. Members, any questions? Oh, sorry. Sorry.

Thank you, Chair. Perhaps it's for the prosecutor. Mr. Alm, I'm sure. You're very familiar with the language of this bill. It includes speculation on catastrophes, such as including natural disasters. Is there any way to look at.

I mean, and this Committee hears a lot of things on insurance, you know, and secondary insurers, and they look at the way we manage our wildfires or don't manage, or they look at, you know, our condos and how much deferred maintenance. And then they calculate. Use all these data points to calculate how much risk we are.

How does this not.

I think it's really scary what you're talking about because the public doesn't trust so much of government now, so much of what's going on, that if people are betting on things like that, natural disasters and other stuff, and things go wrong, their trust in government is going to go be reduced further and further.

So the wide scope of this.

I'm sorry, I'm just to clarify, it's not that people are wagering, it's these corporations are wagering on how much preventive maintenance, deferred maintenance. I mean, so this is an actual industry built on speculation on the way we are prepared for catastrophes, which is included in this.

So I'm just wondering, is there any reading of this that may actually then intersect with our insurance? We would have to look at that.

I. I don't think I can answer that right this minute, but we'd be happy to look at that and get back to you. Sure.

I mean, unless there's anybody else in the room who can talk to that. Thank you. Okay, thank you.

Members. Any other questions?

Okay, we'll take a brief recess. Recess.

All right, Reconvening for decision making. First up, we have HB2227 relating to eviction records. Chair's recommendation is to defer this measure at this time. I do note that there's a landlord tenant working group, which I'm a part of, working on the landlord tenant code right now. I will recommend to them.

And if you're listening, I'm recommending to you now that we take a look at this issue. I do have some concerns over the testimony of the judiciary and others, but at the same time, I think this is a very valid problem that needs to be addressed.

And I do not want tenants to be punished, especially when they've prevailed in their cases. I don't need this following them around. So defer at this time. But I would like the landlord tenant working group to continue their work on this matter and Vice chair as well. Next up, HB 1775, relating to foreclosures.

Voting on. oh, sorry.

Yeah. There were some pretty serious issues brought up in testimony as well. Choice recommendation is to defer this measure at this time. Moving on to HB 1560 relating to consumer protection. This is the wallet pinning Bill there.

I think we need a House position on crypto ATMs so I'm going to select one of these bills to go forward. And given the testimony by the Office of Consumer Protection on the amount of fraud going on, even with wallet pitting in place, I don't think that the wallet pitting Bill is the right one to go forward.

It doesn't seem like it offers adequate protection for consumers to put that in place. Or at least. At least that protection good enough for us. So, recommendations to Defer this Bill. HB 1642 relating to consumer protection.

This is the bill that would ban purchase of cryptocurrency through crypto ATMs but does not specifically does not ban withdrawal of cash from them if you have an existing cryptocurrency wallet. So some of the testimony today I believe was incorrect that it is banning crypto ATMs.

I believe there is still a function for crypto ATMs as a way to turn your crypto that you already have into cash or other services that they may provide. This bill would simply ban the purchase of crypto using cash at these ATM locations.

So Chair's recommendation is to amend the bill description to reflect that it is targeted cash withdrawal or that cash withdrawals are allowed. Some technical amendments needed for clarity, consistency and style and to defect the date. Members, any comments? Vice Chair.

Okay, voting on HB 1642, Chair's recommendation is to pass with amendments. [Roll Call] Chair, your recommendation is adopted.

Thank you Members. Moving on to HB 1647. Again, this is holding hosts of digital kiosks somewhat liable for any fraud committed on their property. I think that we should stick with the House position regarding these chaos and just banning these transactions for purchase completely. So Chair's recommendation is to defer this measure.

Same with HB2003 relating to digital financial asset kiosk transactions. It's a hard name just to say. I do appreciate all the work that the Bill introducer and AARP and other organizations have done on this Bill. I just think that the House position should be a little bit harsher.

I don't think we should be allowing any purchase through these ATMs. So we'll be deferring this measure at this time. Moving on to HB 1640 relating to financial exploitation. You know, I. I kind of struggle with this bill. I think we do need more protections for people at banks.

Given the testimony, though, I would like a better chance to work with the banks to craft legislation that supplements existing financial and state or federal and state requirements. I. I tried to work with them a lot this interim, but because of certain deaths and other events, we weren't able to get the work done.

I thought about passing this on, but I think the better thing to do for this body would be to defer this bill at this time to allow this Committee to work on it again this interim with the banks and federal credit unions and other institutions to try to craft more protection that doesn't conflict with state and federal law.

So we'll defer this at this time. Moving on to HB 2198, relating to prediction markets, Chair's recommendation is to defect the date. I want to add a provision to ensure that it is preserved. This bill is preserved from the repeal in 2029.

And we will also be adding the two categories from Marcus Oshiro's testimony relating to legislation and national security. Members, any comments?

Vice Chair for the bone voting on HB 2198. Chair's recommendation is to pass with amendments. Noting the presence of Representative Iwamoto. Are there any reservations? Any noes?

No. No, no. You're noting my presence? Yes. Okay.

Okay. Chair, your recommendation?

Did you vote no, no, no?

No, I like this one.

One vote per hearing.

Your recommendation is adopted.

Okay. Thank you, Members. We adjourned.