Is Crypto Under Threat? North Dakota Senate Moves to Tighten ATM Regulations

The North Dakota Senate has passed a bill aimed at tightening regulations on cryptocurrency ATMs to protect users from fraud. The bill, House Bill 1447, was approved with overwhelming support in a 45-to-1 vote. It introduces stricter oversight of crypto ATMs and reinstates a $2,000 daily transaction cap per user, a limit that had previously been removed by the state’s House. The legislation is designed to enhance consumer protection and ensure better monitoring of crypto transactions.

Overview of the Bill

House Bill 1447 was initially proposed in North Dakota’s legislative body on January 15. It mandates that all cryptocurrency kiosks and ATM operators in the state obtain a license as money transmitters. This action ensures that crypto operators are subject to regulatory requirements and adhere to anti-fraud practices.

Also, the bill requires that operators post fraud warning notices on all crypto kiosks to warn users of possible scams. Operators are also compelled to employ blockchain analytics to track suspicious transactions and report possible fraud to the authorities.

Additional Requirements for Crypto Operators

The law imposes additional obligations on crypto ATM operators to be transparent and in line with state regulations. Operators will be required to file quarterly reports of the locations of their kiosks, the operators’ names, and transaction information.

This added regulation is intended to stem rising concerns regarding the use of crypto ATMs for illicit purposes. In a hearing conducted by the North Dakota House Industry, Business, and Labor Committee on January 22, House Representative Steve Swiontek, the main sponsor of the bill, underscored that crypto ATMs have been targeted by criminals because there are insufficient consumer protections.

Why the Bill Was Introduced

The demand for tougher regulations comes from an increase in crypto fraud in North Dakota and the United States. The American Association of Retired Persons (AARP) says cryptocurrency scams in North Dakota caused losses of over $6 million in 2023 alone. The FBI also reported taking over 5,500 complaints concerning crypto ATMs during the same year.

Similar Regulatory Efforts Across the U.S.

North Dakota is not alone in trying to license crypto ATMs. Nebraska Governor Jim Pillen signed into law the Controllable Electronic Record Fraud Prevention Act on March 13, which places similar regulations on preventing crypto fraud.

At the federal level, Illinois Senator Dick Durbin sponsored legislation on February 25 to address the crypto ATM scams. Durbin underscored how scammers have victimized vulnerable individuals, particularly elderly citizens, using deceptive schemes involving cryptocurrency exchanges.

Next Steps for the Bill

House Bill 1447 now goes back to the House to be approved by changes made by the Senate. If the House confirms the changed bill, it will be forwarded to Governor Kelly Armstrong for approval. The governor may either sign it into law or veto it.

If enacted, the bill will bring some of the toughest crypto ATM regulations in the nation, making North Dakota a pioneer in consumer protection in the cryptocurrency industry.