SmartTranscript of House Commerce - 2025-02-06 - 9:00AM

[Vice Chair Edye Granning ]: Good morning, everyone. Today is February sixth. It's Thursday at nine zero one in the morning. This is the house commerce and economic development committee, and we are joined by Three Squares Vermont, Hunger Tree Vermont, kinds of organizations. And Ivy Enoch is here this morning with us. Hope I said your name right. I think we should start by introducing to you. Our chair will be a few minutes late, but when he gets here, he can introduce himself as well. And so, Sean. [Jonathan Cooper ]: Good morning. I live in [Herb Olson ]: the southwestern corner of the Bennington one district, which is the towns of Reedsburg, Searsburg, Stanford, and Wilford. Complete. [Lee Ferguson ]: I'm Lee Ferguson. I'm representing the Jericho Valley over to Ledingham, Halifax. Herb Olsen. You're actually [Tony Mechlus ]: at Crystal Lincoln, Moncton Charlottesville. [Abby Duke ]: I'm Abby Duke. I represent parts of Burlington. [Vice Chair Edye Granning ]: Hi. Edie Granning representing Jericho and Underhill and the vice chair. [Ivy Enoch ]: Good to meet you. [Kirk White ]: Kirk Wyatt represent Bethel Rochester, Stockton, and Hancock, and I'm the ranking. [Jonathan Cooper ]: Barry City. Tony Mechlus from Milton representing most of the Milton and [Dave Bosch ]: a little bit of Georgia. Dave Bosch from Clarendon. We're representing Wallingford, Clarendon, West Rutland, [Jonathan Cooper ]: and the bulk of Rutland town. [Ivy Enoch ]: Great to meet you all. [Vice Chair Edye Granning ]: Thank you for being here. [Ivy Enoch ]: Well, thank you, vice chair and committee members, for the opportunity to testify today. My name is Ivy Enoch, as you all know. I live in Burlington and I'm the SNAP policy and training lead at Hunger Free Vermont and we are here with our partners and our neighbors for Three Squares Vermont Awareness Day to ask for your support on requests that together really move us closer to ending hunger in Vermont. And so I'll just go through those specific requests. The first is to please pass legislation to instruct the state to opt into the SNAP restaurant meals program, an appropriate seventy five thousand dollars to cover restaurant startup costs and one hundred thousand dollars for a staff position within DCF to administer the program. The second is to please support five hundred thousand dollars in base funding to strengthen Vermont farms and food security by sustaining two proven programs run by NOFA Vermont. That's the Northeast Organic Farming Association of Vermont, and those two programs are Crop Cash Plus and FarmShare. The third is to please support the request for five million dollars in base and one time funding in the FY twenty six budget for the Vermont food bank to be prepared when disasters strike our neighbors and towns across the state to purchase and distribute food and support the network of community based food shelves and meal site, and finally to please include an additional two million dollars in base general funding for home delivered meals for older and disabled Vermonters through the meals on wheels program, which is operated through the Vermont's area agencies on aging, and include the option to draw down additional matching funds through the global commitment investment. So the federal nutrition program known as SNAP or the Supplemental Nutrition Assistance Program is called Three Scores Vermont in our state. It's a program that used to be known as food stamps, so we're talking about the same program, if we're using any of those names. It's intended to help people with low incomes buy the groceries they need to prevent hunger. The Three Scores Vermont program is administered by the Department for Children and Families Economic Services Division within the Agency of Human Services. We have heard and continue to hear many Three Spores Vermont participants refer to this program as a lifeline, and in many cases, the only reason they're able to afford groceries at all. And as someone who was raised by an extremely loving and hardworking single father raising twin daughters, I might add, I know that the SNAP benefits my dad received was our entire grocery budget. So I know firsthand the power of SNAP to help families get by, to catch up, all while still experiencing the joy of a nourishing shared meal. So it's really true to say that I wouldn't be where I am today without SNAP. Eligibility for the program is determined by both the federal government and the state of Vermont. And in Vermont, people and families with incomes at or below a hundred eighty five percent of the federal poverty level can qualify for the program. So for a family of four, this means monthly earnings of no more than four thousand eight hundred ten dollars or annual earnings of about fifty seven thousand dollars a year. And I think it's important to add that this is actually only about half of what our joint fiscal office calculates a family of four needs to earn to meet all of their basic needs in our state. And benefit levels for the program are scaled based on income and monthly expenses. So not everyone is getting the exact same benefit amount every month. And Three Squares Vermont benefits are deposited every month on a household's EBT card, that works and looks just like a regular debit card. So a trip to the grocery store with Three Scores Vermont looks like any other shopper's experience and that's very much by design when the program was modernized and every retailer that accepts SNAP has a complex computer system that automatically identifies items that are eligible to be purchased with that EBT card. There are more than seven hundred retailers across Vermont that accept SNAP. And each month, Three Squares Vermont keeps about thirteen million dollars federal dollars in our state economy every single month, supporting our local farmers, our growers, our businesses, and our entire community. The state is granted options by the federal government to tailor the program to meet our state's needs and one of those options is allowing select populations who participate in Three Squares Vermont to actually use those benefits to buy hot prepared meals at authorized restaurants and that's what's called the SNAP restaurant meals program. This option is exclusively for older adults, for disabled people, and people experiencing homelessness participating in Three Scores Vermont because these populations typically encounter access barriers and challenges with being able to buy their groceries, to store their groceries, and cook their food. And so in expanding the use of Three Squares Vermont benefits to include restaurants, we can increase food security among these vulnerable populations by giving these select ThreeSquares Vermont households the choice, the option to purchase a hot nourishing meal. In our state, about sixty five thousand people or nearly forty thousand households receive ThreeSquares Vermont and more than half of those folks are older adults or children. While Three Squares Vermont effectively reaches the most low income folks in our state, we know that the program only reaches about forty percent of those who are potentially eligible based on census income data. And there are a number of reasons for this discrepancy including additional eligibility requirements beyond just the income requirement, but as well as the complicated and time intensive application process, the stigma and shame that many associate with applying for government food assistance generally, even if you are eligible. And we see an even greater gap between the number of Vermonters reached by Three Scores Vermont and the number of folks who are at risk of hunger. And in twenty twenty two, UVM researchers found that two in five people in Vermont were at risk of hunger over the past year. USDA research indicates that food insecurity is still increasing nationwide year over year. And since the end of pandemic government support, food insecurity is rising every year. And we know that four point five million more households are food insecure in the US than in twenty twenty one. Three Scores Vermont is our most effective anti hunger program, and at the same time, it does not reach many Vermonters at risk of hunger. For one reason, the cutoff for SNAP income eligibility is so low that many people especially in a high cost of living state like Vermont are at risk of hunger but not eligible for the program. And so Three Scores Vermont is just one part of the safety net program. It can't meet the need on its own and it's really not designed to do that. So the message we really want to convey today is that together we can work to ensure that everyone in Vermont at all times has the food they need to thrive and legislators have a critical role to play in making policy decisions that ensure food security for all and there are policy choices in front of you this year that can move us forward together to ensure food security for all. Thank you so much for your time. [Vice Chair Edye Granning ]: Any questions? [Jonathan Cooper ]: Go ahead. You might wanna do her first because it might take a while. [Vice Chair Edye Granning ]: Go ahead. [Tony Mechlus ]: I just have a very specific question. So three three squares per month equals SNAP. [Ivy Enoch ]: Exactly. [Tony Mechlus ]: And what are the eligibility the income well, I guess, income mainly eligibility requirements for that, and are they fixed in federal law, or can they be amended in state law? [Ivy Enoch ]: That's a great question. So there is, this is one area where there is a federal law but states are also given the choice, to adjust the income requirement. So the federal requirement, income requirement is one hundred and thirty percent of the federal poverty line. Here in Vermont along with I believe forty other states we have raised that income requirement so it's one hundred and eighty five percent of the federal poverty line and that's based on you know number of folks in the household. So as I mentioned earlier about, you know, a family of four would need to make about fifty seven thousand dollars a year in order to qualify just at the income level. Yeah. [Colin Hilliard ]: So just so for my background, I was on food stamps back in the early nineties. I was completely on welfare. Back in my day, you had the coupons, so it was pretty obvious who was getting the benefits and who wasn't. [Alan Reitz ]: Two concerns issues of concern I have is one, food education. I remember those days, people like us, I was living in the housing projects, were buying chips. They were buying a lot of junk food. As a family, we had no clue raising two sons, two toddler sons. What good food was, what nutritious food was. What are you doing to educate the people who are using these food stamp or the the SNAP program? What are you doing to teach them, hey. You know, maybe that bag of chips isn't such a good idea. Mhmm. How do you do all that? You know, what what what do you have any programs? Do you have any educational things? Is there a requirement? The second is there is still a stigma. My father, as an example, he's eighty years old, very eligible for food stamps or the SNAP program, way too proud to do it. Mhmm. So how do you reach those people? How do you show them, hey. This is okay. [Ivy Enoch ]: Yeah thank you for both of those questions and thanks for sharing your own experience too. To your first question, we know you know for most people they know the food that's right for them and their families and so often the quote unquote like helpful food options are just out of budget. And this is why, the the programs that NOFA Vermont operates, Crop Cash Plus, which is a SNAP incentive program at farmers markets, that you know for every one dollar someone spends in their SNAP benefits this winter market season, they're going to get an additional two dollars so that really increases someone's benefit and just grocery you know budget to buy more healthful nourishing foods. I also think you know there are a number of programs at the Vermont Food Bank that do a lot of really great nutrition education to let folks know the options that are available and so supporting the Vermont Food Bank's funding request will go a long way in supporting families and knowing what their options are and also making sure that people can make the right choices for themselves. So that is very much tied to the requests that we have today. To your second question, I think that is a pillar of my job. Right? Like trying to destigmatize the program, it doesn't happen overnight. It takes everybody in this room and outside of this room to really keep the focus on what this program does for families, what this program does for our state economy. And I think that goes a long way in destigmatizing the experience. You know, these are our tax dollars, we pay into this program, we should be able to tap into it when we need. And when we do that, we're supporting our small businesses, we're supporting our farmers, we're supporting our neighbors. So I think, you know, that's one way to to to support the truth that this program supports all of us. And it it takes collective work. Yeah. Thank you so much. [Herb Olson ]: The first request and the testimony, and thank you for sharing this with us today that pertains to the SNAP or SNAP of this program. It's seventy five dollars restaurant startup costs and one thousand per staff position. Later on the testimony, you referred to this this program in a way that seems like select populations are currently participating in it. Can you say more [Jonathan Cooper ]: about what those [Herb Olson ]: startup costs are what to cover and in what way is it is this expanding what's already happening, or just do you need to speak to that, who the select populations are, etcetera? [Ivy Enoch ]: Yeah. Yeah. That's a great question. So there are, I believe, ten states in the country that have elected the SNAP restaurant meals program as part of their SNAP program within their state. Vermont has not yet done that, so that's the request on the table. And so no one in the state of Vermont right now can use their SNAP benefits at restaurants. What we are hoping is that Vermont will adopt that program and the program itself, the restaurant meals program as part of SNAP is limited in which populations can can use their benefits at restaurants. So those are older adults, folks with disabilities, and folks experiencing homelessness. [Aaron Ference ]: I think [Herb Olson ]: I misunderstood it. The description of this is a program that is not yet underway in Vermont. Thank you. I [Ivy Enoch ]: Yeah. Yeah. Yeah. [Herb Olson ]: Got it. Thanks so much. [Ivy Enoch ]: Great question. [Vice Chair Edye Granning ]: Emily, but before you go, I just wanna give we have three other people Yeah. And we have fifteen minutes. So the other piece is that food is this this request in the budget is something that we could, we probably will, weigh in on, but it mostly is gonna go to ag. So just kind of giving folks a little bit of that. Maybe I should have given you that context to her. So go ahead, Emily. My apologies. That's good. [Lee Ferguson ]: I was curious to know, are you doing any works work in schools and, like, how do you get the message out to folks in some of the deepest rural areas? Mhmm. [Ivy Enoch ]: Yeah. That's a great question. So many partners are here in the statehouse today for Three Spruce Vermont Awareness Day, Hunger Free Vermont, the Vermont Food Bank, community action agencies, the area agencies on aging, retailers, business owners, and I think I'm I'm starting off by saying that is because we we all do really important work to share the messages about different programs that are available to families with children, with school aged children. At Hunger Free Vermont we have a team of folks who work on our child nutrition programs and do a lot of technical assistance and outreach work to school food service providers, to teachers, to counselors, after school coordinators. So there is a lot there's a strong connection between folks operating in the food security, realm and folks who are supporting school aged kiddos. [Vice Chair Edye Granning ]: Thank you. Why don't we I don't know who is up next. Same order that we have on [Ivy Enoch ]: our end. Yeah. Okay. Thank you so much. [Jonathan Cooper ]: Thank you. [Vice Chair Edye Granning ]: Thank you so much for being here. Appreciate all of [Lee Ferguson ]: the work that you do. [Denise Reilly-Hughes ]: Alex. Good morning. Thank you very much. I have printed copy of my remarks that I'll certainly share. I know you have an electronic version. Given your time constraints, I'm going to hustle through my remarks. And my phone number is on the documents, so you can certainly reach out to me. Yes, indeed. But I do thank both chair, every member of the committee for hearing my remarks. For the record, my name is Alan Reitz. I serve as director of public and government affairs for Hanover Co op Food Stores of Vermont and New Hampshire. Little background. Despite being incorporated in New Hampshire, our cooperative roots and commitment to Vermont run very deep and very long. We have our bustling store on Maple Street in White River Junction and auto service center in Norwich, production kitchen in Wilder, and our administrative offices where I work are in Hartford. We have about eight million dollars in Vermont payroll. We buy about twelve to thirteen million dollars from Vermont's farm and food producers. And my general areas of work are on affordable workforce, housing and agriculture. In fact, I serve on the Vermont Dairy Commission. When it comes to food assistance, the success we're having in our Vermont store has delivered hundreds of thousands of dollars in savings for struggling Vermonters. I'll share a few details later in my remarks. If you remember nothing else from my testimony, please know that cooperatives like ours and so many locally owned grocery stores across Vermont have a commitment to their communities. Running an independent store is hard work, but we learned long ago, it's one thing to be neighbors. It's quite another thing to be neighborly. That's how community grows strong. Now in the months ahead, as you work on these efforts to consider how to make this community strong, know that we're there with you to get Vermonters the food they need. That might be a senior who needs to have a full meal before taking medications. It could be a parent trying to get better protein on the plates of their child at dinner, and it could also be a parent trying to keep a refrigerator full for a hungry teenager. If you've ever raised a teenager, you know that's difficult work. Each day in our stores, we see the positive difference the legislative action you've taken is making, and you I want to know I want you to know that that idea, the restaurant meals program, is very exciting to us. It is a proven thing that we've seen during the everyone eats campaign, and it allows those businesses, those restaurants who wanna take part and chip in to have a means of doing so. Even though hunger and the need for assistance is on the increase, we are making a difference, reducing pain, filling plates, and making it a bit bit easier on growing teenagers. I wanna tell you just quickly about one means we're doing that as your partners in the community. At Hanover Co op and at cooperatives around the state like Hunger Mountain, City Market, Brattleboro, Middlebury, and others. Anyone enrolled in Three Squares Vermont on SNAP can also participate in what we call our food for all program. So someone who has a need comes in and they very discreetly or they get ten percent more off their food dollar on anything that qualifies for SNAP. And for those residents who do not qualify for one of these needs based programs, we still enroll them if they have a letter from a community service organization. They show us that. They get a card. They can shop, and that stretches their dollars. And I will tell you, it's made a big impact to get ten percent more off. In the case of our White River Junction store and all our stores combined, we've stretched the dollars of of those needs shoppers in need by over three hundred and fifty thousand dollars in the last eight years alone. Our White River Junction store leads all of our stores in that impact. Last year alone, dollars thirty thousand stayed at work on EBT cards or working for people who did not qualify for that program. We know that's money coming out of our bottom line, but it's food that's going into refrigerators and pantries. So there are more independent grocers who wanna be involved in this program of accepting EBTs. Just yesterday, I spoke to the owner of Brownsville Butcher and Pantry. She said, you know, twenty twenty five is the year I wanna get our store into this program. I said, when you're ready, come up to our store, and I will put you in touch with our teams, and they'll show you the ins and outs. And just in case anyone thinks that food co ops like ours are too niche, stop by. I'll give you a tour. We've got the products that, clearly, if somebody's saving over three hundred thousand dollars a group of people, that's ten percent of their total bill. That's a lot of money that you know, three three million dollars in terms of stretching dollars. So [Jonathan Cooper ]: in the [Denise Reilly-Hughes ]: end, I just like to wrap up and say, you know, it's like two trees standing together in an open field. They stand stronger together than a single tree can apart. So we all know that January's cold temperatures have turned into February's dwindling wood piles and depleted oil tanks. When it comes to food, we stand ready. We're out there doing whatever we can. And I would just say that when it comes to discreetly identifying helpful products, come through our stores. You'll see Wix Snap cards on any product that qualifies so we can help quickly guide people through the store, and we also run other educational programs. Thank you so much. My comments do have some of those numbers, and I will share those. [Vice Chair Edye Granning ]: Thank you so much for the [Denise Reilly-Hughes ]: Welcome. Thank you. Secretary, maybe a little Oh, here he is. Down. Okay. Very good. [Vice Chair Edye Granning ]: Georgie Reubens? [Georgie Reubens ]: Hi. Thank you for having me. My name is Georgie Reubens. I live in Burlington, and I'm the director of the Burlington Farmers Market, and I'm also a board member of the Vermont Farmers Market Association. And I'm here today to talk about Three Squares Vermont and to ask you to support Know for Vermont's request for five hundred thousand dollars in base funding to strengthen Vermont farm viability and address food security by sustaining two proven programs, Crop Cash Plus and Farm Share. So Ivy mentioned this, but to recap, the Crop Cash Plus sorry. The Crop Cash program doubles Three Square's Vermont benefits for fruit and vegetables purchased at Vermont Farmer's Market. It's primarily federally funded, but it requires a local cash match contribution. And in twenty twenty three, Crop Cash Plus expanded Crop Cash to all SNAP eligible foods. So that's meat, airy, meat, eggs, dairy, bread, kind of stuff. But Crop Cash Plus had to be paused in twenty twenty four due to lack of funding. So the reason that I support the ask for Crop Cash Plus so strongly is because of the difference I've seen this program make to so many people in my community at the farmers market each week. Every day, I interact with a number of three suppliers per month customers at our market information booth where customers will come. They'll run I'll run their EBT cards, and then in return, I give them tokens and PropCash coupons to spend at the market. And having the opportunity to educate customers new to the program about PropCash is one of the things that I love most about my job. It's not uncommon for that the market is the first time that a person learns about Crop Cash and Crop Cash Plus, and it never gets old when I see people's faces light up when they find out that they have all these additional funds that they'll be able to spend at the market. There's one customer in particular who I'll never forget last summer. She came to redeem tokens. It was the first market of the season, and the crop cash triple match was in effect. And I ran her EBC card. I gave her forty dollars more than she was expecting in return. It's a triple match up to twenty dollars. And she didn't understand why I was giving her all this money. She thought I'd made a mistake. And I explained that more funding was available and that she could use these co coupons to buy any grocery item at the market, and I had to explain three more times before she believed me. She thought she really thought I'd made a mistake. And she was so thrilled. She came back to the market booth later to show me everything she bought with her with the coupons and just to express her gratitude, and that's not an uncommon occurrence. And so I often think about this customer and the many others who benefit from the matching program. It's so clear what a real difference it makes to their lives when the funds they when they sorry. When they have funds to purchase not just fresh produce, but also a range of grocery items that can cover all of their all of their dietary needs. And as a market manager, consistent funding would enable me to reassure customers that they'll continue to have this support and that they'll be able to reliably plan their food budget around it in the future. Outside of supporting our customers, consistent funding for Crop Cash Plus would also support our pharma vendors, some of whom attribute up to thirty percent of sales on a given market day to transactions paid with Crop Cash Plus coupons. Every day at market, I'll check-in with our vendors. And when the Crop Cash Plus program isn't active, one of the most commonly asked questions I get is if or when it will return. For many of our pharma vendors that sell meat, milk, cheese, eggs, syrup, or other products that aren't covered by crop cash, when the program isn't running, the market revenue takes a hit. And so consistent funding would really support our pharma vendors in helping them better anticipate their revenue at market and with their overall business planning. So not only does CROP Cash Plus support our customers accessing a well rounded diet, but it also supports our local food economy. About half of the market half of the vendors at the market are snapped and therefore Crop Cash Plus eligible, but only an eighth or so accept Crop Cash alone. And so consistent funding would not only bring our customers more choice when it comes to their grocery shopping, but it would also include more of our farmers and vendors and contribute to a stronger local economy. So personally, as I'm a I'm a pragmatist, I'm a former farmer, and I'm someone that obviously cares deeply about food access. And I love this program because of the positive impact it has both helping people support get access to fresh and healthy food, but also supporting our farms and local economy. And it just it makes so much sense to me. And so it's for all these reasons that I hope you'll support no for Vermont's request for five hundred thousand dollars in base funding to strengthen Vermont farm viability and address food security by sustaining Crop Cash Plus and farm share. And thank you for your time. [Vice Chair Edye Granning ]: Thank you so much. Yeah. I wanna give Tobin an opportunity Yes. To talk. So we we think we'll, as a committee, talk about the budget a little bit further. And you can see the the way this dovetails with economic development [Tony Mechlus ]: very clearly. Oh, very much so. Yes. [Tobin Porter Brown ]: Hi. My name is Tobin Porter Brown. I live in Grassbury, Vermont, and I'm the owner of Front Seat Coffee in Hardwick, Vermont. We're a coffee shop bakery, but we have a full breakfast and lunch offerings. Frontier Coffee was founded in the summer of twenty nineteen. Eight months later, we had mostly shut down because of the COVID pandemic. However, with the support of the Vermont Everyone Eats program, we have been able to persist and have now seen our business continue to thrive. I should just say that for almost two years, Vermont Everyone Eats was about twenty to thirty percent of our monthly sales. So it really helped us continue, and and now we're able to be profitable and and have just expanded too. So through this program, we participated in both the community meals that were administered through the center of agricultural economy as well as the local board programs. This experience working with Vermont everyone eats gave us a lot of excitement and enthusiasm to support the restaurant meals program that's being proposed today. Our experience with Vermont everyone eats was that it was a huge success. It not only kept Frontier Coffee alive through the darkest times of the pandemic, but it was also a huge community builder that benefited people that were food insecure, many of which are now our current customers. The restaurant industry is notoriously difficult and sees many, multiple headwinds currently with, variable ingredient costs, increasing labor costs, and very slim margins. The restaurant meals program would be a financial benefit to this struggling industry. One of the other surprising benefits of giving out these meals is that it was a huge community builder. The appreciation and joy that people had in receiving these meals, appreciated us with a lot of local goodwill. That appreciation and goodwill has made front seat coffee a vital community hub for Hardwick. We found that many of these meal recipients eventually became regular customers. My experience with working with the Vermont Everyone Eats program gives me a lot of confidence that the restaurant meals program would be a win win program that would be a huge benefit to our state. Alright. [Jonathan Cooper ]: Thank you [Vice Chair Edye Granning ]: so much. We really appreciate everyone being here today for Green Squares Awareness Day and for sharing these programs. I know that we will be talking about this as a committee, going forward. So thank you so much for your time this morning. Thank you. Thank you. [Jonathan Cooper ]: My church in Fairhope is a distribution point for everyone. [Vice Chair Edye Granning ]: So I can Right now. Hardly, [Dave Bosch ]: you know, agree with this community building aspect of it. There is [Tony Mechlus ]: a lot of [Abby Duke ]: coming out of [Jonathan Cooper ]: Yeah. A lot of great appreciation. That's interesting. [Tobin Porter Brown ]: And it really I mean, there is a wide range of people that have participated, and it really sort of they they brought people out of their house and interacting with Really great. Thank you. Thank you very much. [Jonathan Cooper ]: Yeah. Yes. [22 seconds of silence] [Abby Duke ]: Okay. [Jonathan Cooper ]: There's someone right. They get up the street. [Vice Chair Edye Granning ]: So, Aaron, are you leading us through this? I mean, I will. We are still live from before. I just wanna say I really enjoyed your report. I thought it was easy to follow and feel. Appreciate that with all of our the information. [Aaron Ference ]: Good. Excellent. I I wish I could take credit, although I was mostly there for moral support and guidance. But Ethan McLaughlin, one of our attorneys, was the primary author. So [Vice Chair Edye Granning ]: He did a great job. [Aaron Ference ]: He can take all the credit for that. Would you like me to start, or do you need to change anything at work? Hey. Good morning, everyone. Aaron Ference, deputy commissioner for the banking division at the Department of Financial Regulation. Thank you for having me today to to go over our crypto kiosk report. As you may know, that report was mandated by the newly passed legislation last session in title eight section twenty five seventy seven. Just to sort of set the ground level maybe, some of the terminology I may use might be confusing, even some of my comments. So please interrupt if you have any questions. You may not all be experienced with crypto kiosks or even cryptocurrencies in general. So let me know if you do have questions. When we were thinking about how to conduct the report, we decided that stakeholder engagement would be very valuable. So we sought public comments. That wasn't required, but we we wanted to get the lay of the land. We got thirteen submissions. AARP is in the room. They they submitted a a comment letter, the attorney general's office, some banks, Vermont Bankers Association, as well as four cryptocurrency operators, and then even three individuals provided us comments. The statute itself really focused on three areas for us to answer. The first is whether the requirements within section twenty five seventy seven, coupled with federal law, were sufficient to protect consumers from fraud, for us to make any additional recommendations to help in that vein, and then also to make recommendations for enhanced oversight, to help stop illicit activity being conducted through these machines. Just a quick debrief on what the enhancements we enacted with PAC one ten last year were. The first is that we imposed a strict transaction limit. So the one thousand dollars per day per customer was the amount of of funds that someone could put into one of these machines. In addition, we added some fee limits. There were no fee limits prior. This the the bill introduced fee limits of the higher of five dollars or three percent of the transaction value. And that was all inclusive. That included the markup on the sale of the the crypto as well as any sort of just administrative fee on the transaction. And the final component within that bill was a moratorium. So the moratorium forbade the the licensure of any new crypto kiosks within Vermont for one year, but but kiosks that were in operation, in our opinion, legally, at as of July first were grandfathered. When the law went into effect, there were thirty six machines operating in Vermont. Subsequent to the law going into effect, we identified some issues with one of the companies that had thirty three machines, and we had to ask them to leave the state, and they voluntarily surrendered their license and turned off their machines. So in fact, there's really only been those three legally operating machines in Vermont. And then to sort of take a bigger step back, we've always licensed this activity. You've you've had to have a money transmitter license to sell cryptocurrency in this way to Vermonters, and then we also had a registration requirement for the machines. The bill last year enhanced all of these requirements on these providers. Any questions on any of that? Okay. So why did we think these these provisions were important? Mostly for fraud for fraud reasons. We were seeing lots of evidence nationwide and in Vermont that, people were, against their knowledge being directed and using these these machines, and reporting fraud losses. The attorney general's office comment letter reports that over the last three years, they've had forty two complaints involving cryptocurrency losses. Roughly one third of those or fourteen involve directly kiosks themselves, which is a very high number. DFR has also received complaints, not to that respect. But I would also comment that there are a lot of other law enforcement agencies where someone may may direct their their issues with fraud losses to the FBI, state state law enforcement officials as well. And, also, people may be embarrassed, and and I think a large portion of these frauds are never actually reported to any law enforcement agency. [Speaker 15 ]: So the first item, [Aaron Ference ]: are the the new requirements in in twenty five seventy seven sufficient to protect customers from fraudulent activity? I think the moratorium coupled with the actual lack of any machines, just having the three in Vermont, has been the biggest deterrent to to fraud losses. Okay? I mean, it seems pretty simple. If you don't have the machines, you can't be directed to them to to use them for illicit purposes. In the report, we outlined that. We compared the call report data, which is some support and their activity to us. The number of transactions went down from the second quarter before the moratorium to the third quarter after the moratorium by ninety six percent, which is a very steep drop. But that people were still able to access crypto if they wanted just through other means. So I looked at the third quarter data, and Vermonters still converted cash, but not not physical cash. It was cash in their Venmo app or other entities like that, to the tune of about thirty million dollars. So people can still access the market if they wish. It's just not having to use physical cash at one of these kiosks. Also, just wanted to point out that even with the moratorium going into effect, we received a number of inquiries about entities wanting to come into Vermont either before the moratorium went into effect or or quickly thereafter. It's one thing to indicate that, but you still have to go through the application process and provide us with all of that that application material. None of those firms were able to to make make the deadline, unfortunately. In the report, we we do point out that attorney general Clark in their in her comment letter does wish for the moratorium to be extended until there are sufficient protections for Vermonters in that regard. The moratorium, as written, will expire as of June thirtieth of this year. The effectiveness of the thousand dollar transaction limit. With only three machines, we don't have a lot of Vermont specific data to really determine how effective it is. Though from conversations we've had with other state regulators and other research, we do think that it has been effective. It's much more difficult for someone to try and provide ten thousand dollars in one of these cases. It takes a lot of time. Unfortunately, scammers have worked around some of these limits, and I'll talk about that in a in a minute. But it is it has been useful, and it is useful in terms of slowing down the speed at which you can be victimized. We make a few caveats in there. A lot of, you know, a fraud loss under a thousand dollars would not be would not be stopped by this limit. We have anecdotal evidence that that scammers are aware of these limits, and they have either additional compromised accounts or counterfeit accounts, and they're directing folks to use those accounts. So it's not me. It's the app thinks I'm someone else who has already set up an account, and they're they're doing it that way. So it's not a it's not a foolproof situation, and we do have recommendations later on to help address it. And finally, unfortunately, our legislation can't stop folks from being directed out of state. You know, I just did a quick look. Brattleboro has one legal Vermont machine, but Keene, New Hampshire has five machines. Greenfield, Mass has four or five machines. There are websites which will report the, their map based systems, and they'll tell you where these machines are. The scammers are aware of these websites, and they're able to to tell you to go to x y z and and conduct the transactions that way. The the crypto operators, they pointed out that one of the the in their opinion, one of the issues with the thousand dollar transaction limit is that it it undermines the effectiveness of some federal protections that are out there. So these companies, just like any bank or credit union, have to abide by certain anti monitoring monitoring rules and regulations. Two of the important ones are something called the currency transaction report, which is if anyone brings ten thousand dollars or more into or out of one of these accounts or a bank, it needs to be reported to the IRS. And then also there's something called a suspicious activity report, which is where an entity would have to report any activity that doesn't really make sense or may involve some illicit activities. These these machines, according to FinCEN, which is the Financial Crimes Enforcement Network of the Treasury Department, are are mandatory reporters for transactions in excess of two thousand dollars So by setting the and their their claim is that by setting the bar below that, we're somehow undermining the the federal regulatory authorities. We're not aware of any law enforcement agency that has ever expressed a similar opinion. We do have anecdotal comments from law enforcement officers who share our concerns with these machines and their ability to be used for illicit activity. And in the report, we do highlight that we believe that protecting consumers from fraud is more important than than these these federal transaction limits. Any questions on any of that? [Jonathan Cooper ]: Go ahead. Go ahead. Go ahead. Okay. [Tony Mechlus ]: When you say undermines that, the thousand dollar limit undermines the federal limit, I don't quite understand. [Aaron Ference ]: Sure. Yeah. So those reporting requirements are designed to help law enforcement track money laundering or criminal elements. So if the in their view, if the transactions are below the two thousand dollar mandatory reporting requirement, then it somehow makes it more difficult for law enforcement to track a criminal activity that being conducted through the machines. Versus a thousand dollar limit? I I would think that [Tony Mechlus ]: so the thousand dollar limit sounds a little stronger than the two thousand dollar limit. [Aaron Ference ]: From a consumer protection standard, it certainly does. It's the the suspicious activity report. They're mandated to report those transactions that are two thousand dollars or greater. So if if in their view, if we're our transaction limit somehow undercuts that requirement. Yeah. [Tony Mechlus ]: I would just I wouldn't characterize it that way. But I'm not [Aaron Ference ]: I'm not [Tony Mechlus ]: a federal investor. [Aaron Ference ]: Yes. I don't I don't share the view, but I'm just reporting what what their comment was for sure. [Abby Duke ]: I'm curious about I know [Lee Ferguson ]: that this product is a bit different, but at ATMs, oftentimes, there's, like, a two hundred and fifty dollar limit or something like that on on withdrawals. Does that apply to crypto? Or [Aaron Ference ]: That is an a limit that is set by the the network or the institution that operates or your institution that has the card. Yeah. That's not by statute or any other elements of no. It's totally separate. [Lee Ferguson ]: And then just one other question. The thousand dollar limit, is that for deposits and withdrawals or is that [Aaron Ference ]: That would apply to in, in, or out from the machine. I'm not aware of any machines in Vermont that allow you to redeem Bitcoin for cash, though I suppose that is something that could be available. Alright. The effectiveness of the fee cap. Again, this was a measure that we we were concerned about. We wanted to protect consumers, through our our data analysis. Pre this law, we are routinely seeing fees charged to consumers in excess of thirty percent, sometimes forty percent, which really wasn't a great deal for consumers. We had originally requested the fee cap be set at fifteen percent. That fifteen percent, number, I believe, at the time was also had also been enacted in the state of Connecticut. For reasons that were important to the committee last year, they they thought that it should be, much lower, and so now it's the the five dollars or three percent. The crypto operators comment letter really highlighted that, that it makes it hard to operate one of these machines from from acquiring the machine, developing the software, renting the space in a store, location where it's gonna be, you know, paying for the armored car service, any sort of other compliance components that they want to implement, it makes it hard to to to turn a profit there. In the report, we we sort of under we we acknowledge that. That makes it difficult, though we we believe that these these operators will do what's in their economic best interest. And as long as fraud losses are born solely by individuals, there's no no incentive for them to to to help address a lot of these fraud losses. And we do make some recommendations later on that I'll talk about to try and alleviate some of their concerns. Any questions on those those three key areas? K. So we do have recommendations. They're in the report, we didn't really look at question two and three separately. We felt that the recommendations we wanted to make were essentially really a blend of both, so we just answered it as one. The first recommendation would be to to add, language which requires a full refund to any new consumer. So you would define a new consumer as someone who had not previously interacted with that machine, and these transactions would be their first transactions within within seven days. K? Additionally, we we recommend fee refunds for folks who are not new customers. So at least there would be a partial reimbursement for folks who end up victimized by one of these machines. It would only be the female, but at least it would be some we would enact reporting timelines so that you have to report your loss or your victimization to a law enforcement agency or a regulatory authority. I'm assuming that that would be DFR here. And that would help alleviate any false reporting or any people trying to to gain the system. We feel like this should apply to both unauthorized and authorized transactions. And to and to alleviate the the the issue I talked about with scammers who may be getting around the transaction cap, we feel like there should be positive ID verification at the time I'm standing in front of the machine. They They should not be allowed to then just stand there for ninety minutes while I'm being fed all of these other accounts and identities and still conducting transactions, which would violate the intent of the transaction limits elsewhere. Customer support would be very valuable. Live customer support. I think some of the firms, the more reputable ones, actually do offer that. I think that's important to mandate so that folks can call and identify what's going on and and and really get the help and assistance as needed. Mandatory live screening of older adults, those folks are that are sixty or older who may be more likely to become victimized by scams should be screened to help sort of root that out. That would be live screening conducted by the company to help alleviate those concerns. See, a a recommendation would also be the mandatory live screening for anyone who conducts more than five thousand dollars of of these transactions within any ten day day period. As you might expect, even within those transaction limits, you could be victimized for a long time. People you've heard of romance scams where you're you think you're you're dating someone overseas and, you know, constantly being engaged to send money and funds. So this would help alleviate that particular situation. And then we make some other sort of administrative type recommendations so that if I conduct a transaction on a machine, I'm provided with a receipt that shows me the actual public wallet address, where on the blockchain these funds reside. That's important for law enforcement to be able to to research what happened and where it went. Other things in terms of the full name of the account owner, some folks have reported that they didn't even know that the funds were for another individual until they got a receipt that said this was Joe Smith's account instead of Aaron Farris's account. Just emailing the details of transactions to consumers so they have another record of it. And then finally, I do think because we are asking to enact a number of other consumer protections, that evaluating the fee cap may be a worthy step, whether it's fifteen percent, whether it's ten percent. I I don't know the exact limit, but I I think it is justified to increase that a little bit. That's that's my book report on the on the on this report. I'm happy to go into any detail. [Speaker 15 ]: Cool. Given the fact that we've got as a older [Aaron Ference ]: demographic, [Speaker 15 ]: I'm struggling to see what the purpose of having these kiosks in general are because you can easily jump into Bitcoin using apps. And granted, you know, maybe individuals don't know how to use them, but I don't know how hard it is to use a kiosk. But do you what would be the negative impacts of just not having these in in the state of Vermont? [Aaron Ference ]: Yeah. That is a question that we have certainly asked ourselves as well. You know, what is the ultimate utility of these machines? I I we are seeing people enjoying crypto and and without using these machines. I I don't I I've heard reports that people say that's a solution for the unbanked. I'm not so sure because, generally, you you I I don't have evidence of that, but that's what I've seen in other instances. So a valid response would be to either extend the moratorium or just say we don't like this activity as well. [Jonathan Cooper ]: Yeah. The bank is gonna show by crypto. Yeah. Which You said? Somebody one bank is gonna buy for for. [Speaker 16 ]: Yeah. Yeah. Like [Colin Hilliard ]: I was just wondering if you could expand a little bit on the whole live screening thing. I mean, so I I'm I'm IT, so I I know a little bit more about crypto than most. [Jonathan Cooper ]: Mhmm. [Alan Reitz ]: And typically, when a in [Colin Hilliard ]: a crypto transaction, you are get putting money in and that's going to just a a number, and there's no real way to trace what who's who is necessarily behind that number. As long as somebody has that number, they can get to that money. [Jonathan Cooper ]: Mhmm. [Colin Hilliard ]: So what what does the live screening how is that gonna help prevent anything from going on? I I'm I'm failing to see the usefulness in the live screening. [Aaron Ference ]: Sure. So I I think live screening would be very important so that the the operator would have to know that the person standing in front of the machine was the one that had actually just entered that transaction or was about to enter into this transaction. Obviously, live screening after you've put the cash in and the money's gone to the blockchain isn't going to stop fraud. It really is that sort of, identify that, Great. I have an individual that's over sixty. This is who is standing in front of the machine. Have they been contacted by someone and directed to use the machine is the biggest red flag that I can think of. You know, if someone tells you to go bring a lot of cash to this machine, don't. [Colin Hilliard ]: So the live screening, is that something that would be done by someone at kiosk? Or is that, like would you would you have someone turn on, like, a webcam that's receiving the money? [Aaron Ference ]: I would envision it would be in call center or some other technological advancement, you know, whether it's a webcam and then you're talking to one of the operator's employees via the machine or if they need to call you to go through some of these screening questions. I do I do see that that would be useful. [Abby Duke ]: So where are these three kiosks in Vermont? That's number one. And number two is did you talk to anybody who used them? [Aaron Ference ]: We didn't get any comment letters from any individuals who said that they were frequent users. They they might have been users. We did provide in the appendix in the report all of the comment letters. Some are interesting. The three machines, one is in Essex, one is in Norwich, and one is in Frattleboro. They're all operated by the same entity. [Abby Duke ]: Are they just sitting in a store? Or [Aaron Ference ]: Yeah. They're they look like any traditional ATM machine that you would just sort of walk past in a in a convenience store. [Lee Ferguson ]: As far as consumers getting in touch with DFR, what do you do to get the word out? And are there, you know, posted so stuff like that, the ATMs themselves, or are you sending out message to them all? We [Aaron Ference ]: we have outreach teams who go out on a regular basis and talk about fraud in general. And so some of we don't really warn specifically about the machines, but it's part of that larger conversation. So we go to senior citizen groups, I believe. One of our deputies at our original meet and greet mentioned how they were going to a senior group to do fraud bingo that that that day. We also have other resources that we try and put out through social media sort of just identifying general in general issues related to fraud. I'd I'd have to double check, but I believe there are requirements that we're recommending with the providing of the receipt and additional data, which would indicate that contact EFR if you have issues with any of this those sorts of disclosures. [Lee Ferguson ]: Yeah. I'm wondering if it would be useful to actually put something on the machines because I will totally confess. I didn't know that you were a department. So I Yeah. As a regular consumer would not [Jonathan Cooper ]: know Right. Right. At all. [Tony Mechlus ]: Okay. Yeah. [Jonathan Cooper ]: Good to know. So [Tony Mechlus ]: very nice report. Very good. Very thorough. And I'm so focused in on one aspect of your recommendations, and that is for refund for customers who have been deprived. Mhmm. And you you identified, you know, seven day. And I'm wondering about the capabilities of operators either existing or whether they could have the capability to monitor transactions so as to identify, you know, fraudulent transactions. And so I'm thinking seven days enough. You know? If it's fraudulent transaction and the operator has the capability of identifying the situation, You know? [Chris Delia ]: Can [Tony Mechlus ]: you guys start with that? [Aaron Ference ]: Yeah. I I I think you one one response to these limits may be that a an operator will wanna delay the releasing of the actual funds past that period. So you might wanna think about, do we need to balance out sort of the the limitations that that may provide? [Tony Mechlus ]: I was actually getting at something [Jonathan Cooper ]: a little bit different, which [Tony Mechlus ]: is why limited to seven days. In other words, if the operator has a capability to then sign the file from transaction, I could be way out of the issue, but why shouldn't they be responsible for the refund if they can't identify a value in [Aaron Ference ]: Yeah. Yeah. That's that's a good point. I I think we were trying to think of what what might be a reasonable period of time. We came up with the seven days. Is two weeks enough? You know, a month, I don't I don't know. Thank you. I have [Herb Olson ]: a little I'm sorry. [Aaron Ference ]: Can I phone a friend real quick? He grazes me. [Tony Mechlus ]: I love it. [Jonathan Cooper ]: One of [Speaker 16 ]: the reasons that and there's sometimes these, like, time limits Put the [Jonathan Cooper ]: record too. On the record. [Speaker 16 ]: Ethan McLaughlin, assistant general counsel, [Tony Mechlus ]: the Department of Financial [Speaker 16 ]: Regulation. One of the reasons that there's that the industry has advocated to have time limits on on the full refund requirements is really into what I call moral hazard where you have the price of of virtual currencies has historically been very volatile, and there can sometimes be, you know, very substantial swings, in the price of it, especially since you as you zoom out. So over, you know, a six month period, you know, ten, twenty percent swing in the price is not is not unheard of. So I think one of the reasons why the the operators have have asked for these these time limits is that they don't want people falsely claiming that they were defrauded because they've, you know, just suffered a a more common loss on the ordinary price swings in the in the in the assets. But the idea is, you know, I think in in other states, it's been, you know, perhaps even even not as long as the as the seven days. Now the mechanism that we have in there to get around but call this moral hazard issue is the the requirement that the consumer has to file a a written report with a law enforcement or or regulatory, agency. So that's very broad. So that could be their local police department. It could be the FBI. It could be DFR. It could be, you know, the CAPS program. But they have to make that that written report, and the the thought or the hope is that, you know, Joe will be less likely to make a to make a false report if, you know, if they're doing so to some sort of law enforcement agency. So that's sort of meant as a as a as a check on fraud. But at the same time, there's not a requirement in there that, you know, the agency or some court has to find that the customer was was defrauded and that and the victims. There's still some, you know, there's a a a balance in there. It's enough that they report it to trigger the the refund requirement that does, you know, I think, open up some potential fraud risk on the side of, you know, consumers potentially defrauding the the companies, trying to get, illicit refunds. It's not something that we've heard about in in in writing. It's anything. It's more of a a theoretical, possibility. You know, the the truth is that oftentimes these scams are they're very difficult cases. Right? Because well, shouldn't say they're they're difficult. It's very clear that there's a specific crime committed. But, you know, the scammer may be in Cambodia or halfway across the world. The the crypto has gone through, you know, generally, you know, a a series of wallets, and they're sort of expensive transactions. So to actually bring a case like that to trial against someone in a jurisdiction where they don't act don't actually have the ability to to arrest that person, you know, I'd say a a fraction of the of the actual, criminal frauds actually result in a in a trial, you know, where you'd get some sort of definitive, pronouncement by a by a court. And that's especially the case when it's you're just talking about ten thousand dollar, loss for a consumer. Though oftentimes, you know, these things are are related. Saw something, you know, recently where, you know, we had a a, you know, potential victim in in Vermont, but it looked like, you know, the address that they were aggregating the proceeds from the scam and you'll receive something like a hundred million dollars of of crypto within a, you know, a period of of days, and that was never used outside of that. And a lot of the, you know, wallets involved in it were used a a signal time. So that's probably more of an answer than you were [Jonathan Cooper ]: than you were looking for a question. [Herb Olson ]: The I'm still first, I'm struggling with the utility of the kiosks and so I sort of appreciate some of the fantasies from Chris and AARP that expressed some concern. I would like to know a little bit more about the effectiveness of the in person coaching or conversation that takes place in banks when these scans are similarly being perpetrated. As I recall, we heard that eventually, you just have to let people have have their money anyway. And if I have some concerns that that the in the live screening if the banker that you know personally can't get you to not do this is whatever company entity that, you know, that's gonna be on the phone with you or something actually going to be able to get you out of the frame of mind you're in that I must do this now. Or should I ask you, what is your success what broadly speaking, can I sorry? [Aaron Ference ]: I was [Tobin Porter Brown ]: Right now we have Aaron. [Jonathan Cooper ]: Got it. Alright. So we can I'll ask Chris if he wants to weigh in. [Herb Olson ]: Okay. Your thoughts on how do you feel about the utility of that live stream? [Aaron Ference ]: Yeah. I I do think it is valuable. I think banks and credit unions and their frontline staff are having these conversations when they are seeing things that just don't make sense to them. If they're having customers come in and they're doing a sending a wire transfer to to Timbuktu and it's outside of their normal pattern, they're going to ask those questions. That's what really what we're, hoping can be, input into this transaction is is a one more step where someone has to say, does this make sense? Is this person actually who they say they are? Is this person being induced to, do something that if they really thought about it, they would not want to do? [Abby Duke ]: Is there a downside to just not allowing these cases at all? [Aaron Ference ]: You know, I I I don't know. I I believe you might wanna check with ledge counsel, but I believe you you would have the power to to ban the machines for sure. I know that the state of California was sued when they, elected and put in place some of their restrictions. I believe the suit was resolved in their favor. So, you know, the argument would be the downside is that people don't have access to crypto, but I've already should have told you that people are still engaging crypto if they want. [Jonathan Cooper ]: So when the department's view or the department's opinion, do these kiosks provide a benefit to them? [Aaron Ference ]: You know, it it's a it's a certain balance for sure. I mean, we've seen people doing transactions, which didn't seem to make sense. We've also seen people putting in, you know, fifty dollars or a hundred dollars here. I I don't know, why someone would engage in a transaction that way, but there is some utility. We don't want to cut off commerce, but we also don't want folks to be victimized. [Speaker 15 ]: You have a sense of how much I hate to ask this question. How much revenue the state of Vermont is taking in on these k kiosks? [Aaron Ference ]: The only revenue that I believe the state would, receive is just through our department and the licensing fees that we would get. So it's it's de minimis. And could we put them under the same regulations as bankers? We have this in a in a separate area of DFR through a license. It's what's called a money transmitter. So these operators need to be a licensed money transmitter in Vermont, number one. Then they have to go through and tell us where they would like the machine to be and provide a whole host of other disclosure related information to then get the license for that location as well. So it's not it's it's a separate from from traditional banking, but it is still covered as a banking like thing for the license idea. [Speaker 15 ]: Has there is there any states that have just outright banned them? [Aaron Ference ]: I'm I'm not aware of any. No. [Speaker 15 ]: K. First? It might be [Aaron Ference ]: the first I have I have heard of additional legislation being enacted in other states to adopt transaction limits, to adopt fee caps. So people may have seen our law and and have acted on it too. [Jonathan Cooper ]: Shouldn't be there. Of course. [Herb Olson ]: So with the reporting request timeline, requesting a refund within six months after the last fraudulent transaction, is that would that also apply to transact potentially fraudulent transactions prior to if there was a series of them? The first one was six months and seven days. The last one was six months. Does it include all the ones that may have exceeded that time? [Aaron Ference ]: In in our thinking, yes. That timeline wouldn't start until six months after the last one, but would be would roll forward to any reported fraudulent transactions forward. [Herb Olson ]: As long as it's with the same fraudster? Or [Aaron Ference ]: I think as long as someone is reporting to law enforcement that that they were a victim of fraud and these are the the situations that we wouldn't be concerned with the the fraudster itself. Thank [Jonathan Cooper ]: you. Thank you. You're welcome. Thank you. Excellent. Would you like to share? [Chris Delia ]: For the record, Chris Delia, president for Mount Bankers Association, and I'll give you a chance to ask or finish asking your question. [Aaron Ference ]: Thank you. [Herb Olson ]: So we've heard about the potential for the recommendation to improve some sort of on-site in the moment Right. Counseling, which would be done remotely somehow. Mhmm. That seems to me to be perhaps less effective than something in person or with people that you know Mhmm. In a you know, at a traditional bank. For bankers, what have you seen in terms of the success rate of getting people to stop before they make things worse? [Chris Delia ]: Right. So I can't give you a a a number, if you will, or a percentage. The concern that we have isn't with a crypto entity or that people wanna deal with crypto. It's how the technology is used to take advantage of a consumer. So for our institutions, frontline folks, fraud divisions, etcetera, there's continual training that occurs. There's continual updating of what the latest scams are that exist in the marketplace. There's material that's pushed out to consumers either directly in conversation, which I'll go back to in a minute, through social media platforms, through, other methods to educate consumers that this is happening in the beware. [Herb Olson ]: So to have the [Chris Delia ]: conversation directly with the individual while you're standing in front of me can be extremely effective, but it is ultimately the mindset of the individual that's going to drive what happens in the end. An example that occurred down in Brattleboro was an individual got an email that looked like it was from his financial institution. Very easy to do these days. You can, you know, pretend that you're somebody else. The email said there's a problem with your account. Go to the bank. Take the money out. Go to the crypto kiosking team, one of the five, I guess, and put the money in. It will route back to your bank account, and that will correct the problem. And nine thousand dollars later, the money was gone. Now he did not when he went to the institution, there was a conversation that occurred and has occurred with many of other people, but he was not willing to listen. An individual who says that I'm in this long distance relationship with a woman who's in the military, who has two kids. I want to take money out of my account, and I'm gonna wire it to her, even almost going as far as adopting the kids was still of the belief that he was in this relationship. And then there's others that step back and say, oh my god. How could I have been so foolish that I would have fallen through this? So those conversations are very important. At the end of the day, it is your money. And if you wanna take that money out of your account, you have every right to do so. That's where the challenge is. There are states that put holds on account for specific transactions. For example, our neighbors across the river, in New Hampshire, I think it's a fifteen day hold. So if you were to come in and say, I wanna take ten thousand dollars out, and the bank has the conversation, and it's you're describing it as one of these likely scams that's out there. In New Hampshire, they have the ability to say, okay. We're gonna hold that transaction, only that transaction for fifteen days. And think of it as a reflective period, perhaps a cooling off period because maybe after that period of time, they come back in and say, oh, yeah. How could I have fallen for this? Still having conversations with those folks. So it it's one of two you know, that conversation is one of two of many tools that are used to try and talk people out of these circumstances that they fought for. [Speaker 15 ]: I mean, could open it up and allow banks only to have it in their their facilities or their [Denise Reilly-Hughes ]: Crypto kiosks? [Jonathan Cooper ]: Yeah. No. [Tony Mechlus ]: Thank you. [Vice Chair Edye Granning ]: I'll just put what I'm saying. No. [Lee Ferguson ]: It's I think we wanna do it. [Speaker 15 ]: Do it in the bank. And that's and that's what is what would that would effectively do is they would be gone. Okay. Right? But it it provides that you know, if there was a bank that wanted to do that Yeah. It would provide that on staff individual Yep. That could prevent it and still technically allow them, which would, you know, avoid a lawsuit. Yep. So right. [Chris Delia ]: There are are banks across the country that are looking at crypto and trying to figure out whether they wanna get into this world or not, kiosk or no kiosk. It's a pretty big step when you're looking at this. And what are all the rules and regulations and guardrails that go along with it? Where and and to my knowledge, those conversations are not going on with my members here. What we are talking about here is we know that some of our customers are using crypto. And how does that factor into the work that we do? For example, if if I create a trust for my kids and I have crypto assets and I put them in that trust and I die, and we have wealth management individuals and and trust officers that now will work towards settling the estate. How do I deal with the crypto that's in that estate? If I've got customers who come in for a loan of some sort and their income is based in crypto. Well, one year I could be here, and another year I could be here. So we're trying to figure out how all of that plays in the market with our customers. But right now, I don't see our banks in Vermont moving in a direction of offering crypto services, kiosks, etcetera. I appreciate your creativity, though. I just Yeah. [Speaker 15 ]: It's not digging the kiosk. It it it does concern me. It should be I mean, you know, I get I get there's apps out there like Robinhood, but it Yeah. I think it's Robinhood where you can Coinbase. Go into well, Coinbase is also available for crypto. But, you know, I'm thinking, like, should this be similar to doing a regular investment? Granted, it's not a regular investment. It's fake. And it's you know, at any given minute, it can go from ninety thousand of Bitcoin down to, you know, ten cents where Right. I think it originally started off, which I wish I had gotten involved in. When it was like point zero zero one percent or in one cent. But to to just allow it to free range as we it just I'd rather have it in a more stable institution than, you know, your local five and or not five and done, but seven eleven or something. [Chris Delia ]: Yeah. And and that's just the physical location. I think keep in mind what's happening behind the scenes and that's where you've got your Department of Financial Regulator who's going to continue to oversee these, entities that have these machines in Vermont depending on what your public policy decision is. And and it's kinda like the other conversations you've been having on some other matters. You've you've got you've gotta make the public policy choice to do we see a business I don't wanna say a business model, but do we see value to this type of business product or access to this product in the marketplace compared to what are your concerns about consumer protections, and is there a balance there? If people feel strongly that I've got access to crypto in other in other ways, and you wanna be the first not to allow kiosk, you have every right to do that. If you think that having some kiosks in Vermont under the regulation and guidance of DFR is reasonable, and you're building consumer protections through DFR, you have the ability to do that as well. It's ultimately a policy decision where you wanna go with it. I mean, and convincing your colleagues or the other body do agree with you. [Speaker 15 ]: I mean, it's a question of how many people do we want to allow to get ripped off without. [Chris Delia ]: Well, the potential is there. Thirty million dollars. Was it just one quarter? That's a lot of money. Don't know how many transactions that is, but that's quite a bit of money. So the the that's the dilemma that you face in this conversation. We're good where we are with ATMs and [Jonathan Cooper ]: Thank you. I'll be on the way in. [Speaker 15 ]: Oh, yeah. [Jonathan Cooper ]: I'd be happy to see. Thank you. [Speaker 18 ]: For the record, Colin Hilliard from ARP Vermont, the advocacy director. I can just give some some brief comments, and then happy to answer any questions. This is a really big issue for ARP. We're engaging in this around the country in many states. This is increasingly becoming one of the the ways that we're seeing, you know, fraud, and it's it's it's such a new the kiosk, especially, are a new newer product, and it's of really great concern for us and our members. Just a couple very brief comments on the the the report, that was, really robust and thoughtful and appreciation to to DFR for that. Our our kind of main two comments would just be we would caution about any for the mandatory screening of setting in a particular age limit on at what age that would would happen. Fraud's something that can and does happen to everyone. And so to say, you know, at a specific age that that that screening should be engaged in, the recommendation for, you know, customers that engage more than five thousand dollars would have, the screening. That's something that for everyone that that we could support. And just also wanted to note on the full refund period, our recommendation is for for thirty days for that. We see that, you know, a lot of times when these a lot of folks that are targeted with these scams are a lot of times victims recently of or I shouldn't say victims, but they've had a traumatic event in their life recently, maybe the death of a partner. Isolation is particularly indicative of of some correlation there to being more susceptible to a big scam, and so it can take some time for the individual maybe to realize really what has happened. And so having that that additional time for for that person and maybe folks in their life to haven't checked in on them in a while, you know, that that that that extra time, that thirty days can be really important. Happy to answer any more questions. ARP also has a a fraud watch hotline number, one eight hundred number. We advertise that pretty well to to our members and are increasingly trying to do as much education as we can on that. And I would be happy to connect the members of the committee with our folks that do that work. I believe it's in partnership with the GA's office or I believe, in Colorado. That's a that's a partnership that we do and could talk more about, you know, how those hotlines work and and how successful they are. [Jonathan Cooper ]: Thanks for calling. [Speaker 15 ]: Thank you. [Aaron Ference ]: I have [Abby Duke ]: a quick question, Colin. Do you see any utility to these kiosks? [Speaker 18 ]: I will say that our members are cons very concerned with with the fraud that these posed. I haven't heard any anything from our members that they find them useful. [Aaron Ference ]: K. K. [Jonathan Cooper ]: So I guess, you know, there's there's a I have a bill that's being that's drafted by the only company that's remaining up to mark right now. In order to go forward, just I wanna I don't wanna put more on Maria. I wanna know where the committee is at. If you find, you know I think we need to find that there's value for Vermonters in having these kiosks here. And and we do have to do something because the sunset will come off. So, you know, I think I wanna know where the committee's at. Do you wanna go through a process of putting stronger protections on that would then allow the kiosks to be in the states, or do you want to just remove the sunset and keep the keep what we have on the books now, or do you wanna ban them outright install? Because, you know, the deputy commissioner said we can't change the fact that our jurisdictions that are surround us over the river and and south of us continue to have these kiosks and that Vermonters still can go out and be defrauded. But that in the state, we have we provide strong consumer protections for our for our citizens, and we wanna make sure that if there's no benefit to them, maybe we shouldn't have we'll be available to get these yeah. I'll send this tape. And we can also ask the HD to come in and add more discussion, but just wondering where everybody's at right now. What you're thinking, where you want to go. [Speaker 15 ]: I mean, I I think it's pretty clear where I stand on this. If we're gonna have them, we should have them in a financial institution that's brick and mortar, where there's somebody there that will be able to intercede. Other than that, I don't think that they belong in a, you know, a local convenience store where anybody can go up and, you know, restrictions on there, thirty days probably isn't enough. I would probably say sixty or ninety days. I I don't see the benefit when I can easily purchase, you know, Bitcoin for fun. You know? It's not yeah. I I just that's where I stand. Good. So [Jonathan Cooper ]: I would like to ban the person. I I am a relative that fell victim to a romance scam very much like they've talked about, problematic loss, and shortly thereafter, this happened. I have a Coinbase account, and it's very the app is free. It's very easy. If I wanted to send or receive crypto, no big deal. My only concern is I I would not wanna bring down, you know, legal [Alan Reitz ]: litigation on the state or whatever because you can't [Jonathan Cooper ]: we can't make it a week. In which case, if we couldn't, I would wanna make it so restrictive that it's almost impractical. [Dave Bosch ]: K. I wanna make sure being somewhat slow that I understand the thirty million dollars in the fourth quarter alone. Was that the actual amount of cash used in these kiosks, or was that just Crypto coin in general? [Aaron Ference ]: That was people using, just buying crypto with cash, but it was, you know, cash in their Coinbase account or cash in their Venmo account or [Dave Bosch ]: So it was pretty much all sources. It wasn't so we don't do we have a figure on how much the kiosks are actually used? [Aaron Ference ]: I could certainly get that for you. In the third quarter, it'd be very little. As I said, it went down ninety six percent. [Jonathan Cooper ]: Okay. Because of what we put in place last Right. January, February, July, that there was only one one key one crypto business that stayed in Vermont. They only have three kiosks. [Herb Olson ]: I was really distressed by the Los Angeles County sheriff's description of how cryptocurrency how these kiosks are being used and the extent but I was heartened by the extent to which the the the dramatic drop that their intervention had sort of brought about. If we ban them outright in Vermont, then we aren't doing anything in some ways for consumer protection. It may just seem that they don't have they don't have them here. I wonder if having the what DFR suggested, be implemented means that it is here in a way that protects consumers. If those three are not here in the state, then everybody's going to other states to do this. I would hope that, you know and it seems like the New Hampshire fifteen day hold isn't some you know, that that doesn't apply to this kind of transaction as much as I would like it to do. I feel I'm pretty sure that whatever the kiosk company does by way of counseling and guidance will not make much of a difference, and we'll just be relying on the one thousand dollar daily cap to to limit losses. But with those in mind, I feel like I I I'm leaning towards what DFR proposes. So at the very least, we know that we have a handle on something in our state and not banning people to the regulatory mechanisms outside. [Jonathan Cooper ]: I guess what I would say is no matter no matter what we do, if we ban them, we're still providing consumer protection for Vermonters. If we put regulation on them, strong regulations, and there's still if it's if it makes it harder for them to do these transite, they're still gonna go across the river. So if it's not either way we do it, they can still utilize everything that's that's either south of us or or east of us. So Which [Herb Olson ]: you know? I like Emily's comment. Like, maybe there needs to be something on those kiosks that that you need to talk to DFR. There's something and there's then that way we're at least communicating in a way. It's similar to what's on a pack of cigarettes. At least we're saying something, and maybe that which we can't do if they're not there. [Jonathan Cooper ]: I think, you know, the the [Lee Ferguson ]: one thing that [Jonathan Cooper ]: is really effective is how the banks handle these transactions, and that's person to person, face to face. These are not. That's that's where the fraud there's really strong potential for fraud comes in because there's no one there really to talk to them even if we, you know, have a, you know, some kind of way of for them to be having a conversation with someone on their cell phone. And that all depends if we're in an you know, they're in an area where they have good cell service too. So I don't know how effective that would be. And especially when you're in a store, someone's gonna be having a conversation with you and you don't you know? I mean, the privacy thing and all that stuff, it's where I I don't know. [Lee Ferguson ]: I echo the practical concerns about doing the, like, face to face verification thing. I know that there are all sorts of technologies that do verification, but I'd be curious to see, like, what that looks like in a way that it's not exposed on people's information to the wider public. I am I also had a relative who got scammed through these things, so I'm pretty poor trying to offer as many protections as possible. There's something to be said about making it as inconvenient as possible for for folks to, you know, to make these transactions and then, you know, limit the risk of the most part of the money. The there is something to be said, I guess, in [Tony Mechlus ]: my mind about having people have [Lee Ferguson ]: to go all the way to another state. At least that offers, like, [Tony Mechlus ]: an additional cool off period to [Lee Ferguson ]: maybe save during the drive. [Jonathan Cooper ]: So [Lee Ferguson ]: yeah, I I'm pretty sure banning them also because there are not that many here to begin with, and they're not I don't really see the full utility if you have access to crypto in various other ways. The one thing I would say just for the record is I would love to see a way for DFR to get their reporting information out as much as possible so that whether they're on the ATMs or or not, because people are getting access to these products elsewhere, it would be great to know that, folks had kind of another line of recourse that was well known. [Tony Mechlus ]: To me, this the transaction seems to be inherently susceptible [Speaker 15 ]: to fraud. [Jonathan Cooper ]: You know, [Vice Chair Edye Granning ]: I don't know [Tony Mechlus ]: how you get around that. So, you know, you got the I I would say, you know, across the river and all that, but I just don't see the utility. The only pause they would have is if attorney general and someone said, hey. You're gonna get sued. It's gonna cost you a lot of money, and I don't think we have a good handle on that. You [Jonathan Cooper ]: know, kind of down, but, [Tony Mechlus ]: you know, she she's the one that would be able to say something like that. If we do have to regulate them if we do think we need to authorize them, then I think they should be quite regulated for consumer protection, including making the operator really responsible for fraudulent activity. [Abby Duke ]: So it it seems like a lot of effort and need to regulate for something that doesn't seem to have a whole lot of usefulness. So I I don't see why I I sort of think we just shouldn't have them. I you know, through the report, through the testimony, I was looking for benefits. I could act to have an ETF, and I just I just couldn't see them or ways you know, you could there's other ways to transfer money into crypto. You know, I was struck by testimony from one of the bankers who said they had never talked to somebody who used one of these who wasn't for a fraudulent activity. So I've you know, that's that's where I still I [Kirk White ]: I mean, I I had the benefit of being here last year when this when this came up. And and, I mean, I I agree. I don't I see a huge potential for a few who says as Herb said, I mean, it's sort of built into the system. I don't see any utility. And I remember that when when the, attorney general gave testimony last year, they one of their concerns was that that they thought that one of the most the highest utility of the cryptocurrency kiosk was money laundering from drug dealers. And so so I would've even just based on that, I I am I'm good with Bennett. [Vice Chair Edye Granning ]: Yeah. I'm supportive of the DFR recommendations. I'm supportive of the that he's desire to eliminate the use of them in our state. I don't see them as valuable consumers. [Jonathan Cooper ]: I think what we'll do is we'll ask the AG to come in and just weigh in on we decide to ban on this or we use on solid legal ground to do so. I believe we are. I think we can regulate entities for the protection of our citizens, so we can certainly do that. Real quick, you got five minutes for a break, and then we're gonna start on and [Aaron Ference ]: we can [Speaker 15 ]: I ask I can ask afterwards? [Jonathan Cooper ]: And I [Lee Ferguson ]: just really quick. Is there anybody been in touch that actually has have had a positive experience? Shouldn't care for them. [Jonathan Cooper ]: I I think we heard from the deputy commissioner that if they hadn't really heard anything any positive, did you? [Aaron Ference ]: No one in their comments said that they use the machines regularly and and most of them are like this. [Jonathan Cooper ]: And that they would would be a distressful for them to have to go across the across the river. They're probably doing that already. [Lee Ferguson ]: Just just just to confirm. Yeah. They're probably I will be [Jonathan Cooper ]: real quick. I just want you guys to know it was the intervention of the teller in my situation Mhmm. That stopped this whole thing. K. So five minutes. Let's be back here at ten forty.

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