Indiana lawmakers are making strides to incorporate cryptocurrency into public pension plans while also imposing new regulations on crypto ATMs. A recent legislative proposal has successfully navigated a critical milestone and is slated for discussion in the Senate next week.
During a testimony session, Senate lawmakers reviewed a variety of House bills related to digital currencies, although no votes were cast during the meeting. Senate Insurance and Financial Institutions Committee Chair Sen. Scott Baldwin referred to this pause as a “tactical pause,” aiming to ensure the bills are in harmony with forthcoming consumer lending law updates.
House Bill 1042 is a significant proposal that would enable certain public pension plan members to elect self-directed brokerage accounts that include options for crypto investments. Furthermore, the state would gain the authority to allocate plan assets into crypto exchange-traded funds. It is essential to note that participants in defined benefit plans will not have control over the investment decisions, as these will be determined solely by the state. However, those in defined contribution plans will benefit from these new investment avenues.
The legislation also seeks to limit the extent to which state and local governments can restrict crypto activities. Apart from the Indiana Department of Financial Institutions, state agencies will be prohibited from banning digital mining operations, restricting the use of crypto for legal service payments, or taking custody of digital wallets that utilize specific technologies. Tom Perkins, the investment counsel and director of investment stewardship for the Indiana Public Retirement System, expressed a neutral stance on the bill, stating, “We”ve worked with the House to get it to the current form and (we”re) more or less happy with it.”
Local governments will also be barred from obstructing crypto mining businesses, such as data centers, from functioning within industrial zones, as well as from preventing residents from engaging in crypto mining at home.
In a related development, Indiana has seen a significant rise in crypto ATM scams, with 35 reported cases in the previous year leading to losses exceeding $400,000. This alarming trend has spurred the introduction of a bill designed to regulate these virtual currency kiosks. Rep. Wendy McNamara, the bill”s author, highlighted the dangers, stating, “These ATMs have become a powerful tool for scammers to prey on seniors and people in crisis.” Victims are often misled into believing they are making legitimate transactions, only to find themselves victims of fraud.
In response to local efforts, such as an ordinance passed in Evansville requiring signage and receipts for crypto ATMs, the proposed statewide legislation aims to standardize regulations. The measure mandates kiosk operators to secure a money-transmitter license and obtain permission from the Department of Financial Institutions to install the machines. Compliance with data reporting requirements will also be necessary, alongside stipulations to refund victims of scams the total payment, including transaction fees.
Operators will face restrictions on transaction fees, which cannot exceed 10% of the total transaction value, and there will be limits on how much new and existing users can transact over specified periods. However, crypto ATM operators have expressed concerns that these regulations could jeopardize their businesses in Indiana. Larry Lipka, general counsel for CoinFlip, argued that the 10% cap is overly restrictive, given that their average fees range between 17% and 19% across their kiosks in the state.
He further contended that restricting transaction amounts for customers based on their usage period is against the principles of freedom. Additionally, he pointed out that federal law only mandates refunds for unauthorized transactions, leaving scam victims in a complicated position since they willingly authorized their losses.
As these legislative changes unfold, Indiana is positioning itself as a state that is not only exploring the integration of cryptocurrency into public pension plans but also addressing the growing concerns surrounding crypto ATM scams.
