North Dakota lawmakers are currently considering a bill aimed at protecting consumers from scams involving cryptocurrency ATMs. The proposed legislation, known as House Bill 1447, was introduced to the state’s legislative assembly earlier this month and includes measures such as capping daily withdrawals, regulating transaction fees, and mandating fraud warning notices on crypto ATMs.
Crypto ATMs are kiosks located at physical locations that allow users to convert cash into cryptocurrencies and vice versa. However, the lack of regulation surrounding these machines and the anonymity provided by cryptocurrency transactions have made them a target for scammers looking to exploit unsuspecting individuals. According to Lisa Kruse, North Dakota’s Department of Financial Institutions Commissioner, there were 103 reported crypto scam complaints filed with the FBI in 2023 alone, resulting in reported losses of $6.5 million.
House Representative Steve Swiontek, the primary sponsor of the bill, expressed concerns over the current lack of regulations and protection measures that make it easier for criminals to exploit crypto ATMs. The proposed bill seeks to implement various consumer protection measures, including capping daily withdrawals at $1,000, limiting transaction fees to $5 or 3% of the transaction amount, and requiring all crypto ATMs to display fraud warning notices.
Additionally, the bill mandates that kiosk operators acquire a license, comply with state law requirements applicable to money transmitters, and submit quarterly reports to the state commissioner. Operators must also ensure that kiosks are placed in commercially accessible areas, are accessible to users with mobility limitations, and are equipped with adequate security measures such as proper lighting and surveillance.
The bill has garnered support from committee members and industry representatives, although some, like Kevin Lolli from CoinFlip, have expressed reservations about the transaction limits and fee caps. With the rise in crypto ATM-related fraud cases, regulators worldwide have been tightening oversight of the sector. In Canada, the Niagara Regional Police announced a collaboration with major kiosk operators to issue warnings on crypto ATM machines, while authorities in Germany conducted nationwide raids to crack down on unlicensed crypto ATM operations, seizing roughly $28 million in cash and 13 kiosks.
As concerns over money laundering and unregulated operations persist, regulatory efforts to safeguard consumers from crypto ATM scams are becoming increasingly important. The proposed bill in North Dakota represents a step towards protecting residents from financial scams and ensuring the integrity of cryptocurrency transactions in the state.