North Dakota Senate Approves Bill to Regulate Crypto ATMs

The North Dakota Senate has taken a significant step in regulating crypto ATMs, passing House Bill 1447 with a 45-to-1 vote on March 18.

The bill, initially introduced in January, aims to establish strict oversight on crypto ATM operations to curb fraudulent activities and protect users.

If signed into law, it would impose licensing requirements on operators, mandate fraud warnings, and set a daily transaction cap of $2,000 per user.

The legislation, now heading back to the House for approval of recent amendments, resulted from growing concerns over the misuse of crypto ATMs for scams. This issue has plagued both North Dakota and the broader United States.

Strengthening Consumer Protections Amid Rising Crypto ATM Fraud

North Dakota’s initiative to regulate crypto ATMs comes in response to increasing reports of financial scams linked to these machines.

According to Lisa Kruse, the state’s financial institutions commissioner, in the January report, residents filed 103 complaints about crypto ATM scams in 2023, resulting in $6.5 million in losses.

To address these concerns, House Bill 1447 enforces several key regulations. Crypto ATM operators must obtain a money transmitter license, ensuring greater accountability.

Additionally, all kiosks must display fraud warnings to alert users about potential scams, and operators must submit quarterly reports detailing machine locations, transaction data, and company details.

Furthermore, blockchain analytics will be mandated to identify and flag suspicious transactions, helping authorities track fraudulent activity more effectively.

Initially, the bill proposed a $1,000 daily transaction limit, which lawmakers later revised to $2,000 for the first five transactions within 30 days. The Senate has now simplified the limit to $2,000 per day.

The legislation’s next step is for the House to review these adjustments before it reaches Governor Kelly Armstrong for final approval.

A Nationwide Crackdown on Crypto ATM Fraud

North Dakota is not alone in its efforts to regulate crypto ATMs. Similar legislative measures have been introduced in other states.

On March 13, Nebraska Governor Jim Pillen signed the Controllable Electronic Record Fraud Prevention Act, which introduces stringent licensing and reporting requirements for crypto ATM operators.

Likewise, U.S. Senator Dick Durbin of Illinois has proposed federal legislation targeting crypto ATM scams motivated by real-world cases where victims were deceived into making large deposits under false pretenses.

The rise in fraudulent activities involving crypto ATMs has become a national concern.

The Federal Trade Commission reported that fraud losses at Bitcoin ATMs surged nearly tenfold between 2020 and 2023, reaching $65 million in just the first half of 2024.

Alarmingly, elderly individuals remain the most vulnerable demographic, with consumers aged 60 and older being three times more likely to fall victim to scams.

Despite these concerns, according to Coin ATM Radar, the United States remains the dominant market for crypto ATMs, with 29,819 machines accounting for 78% of the global share. Canada follows at 9.2%, while Australia holds 4.3% of the market.

Regulation vs. Innovation

While North Dakota tightens its grip on crypto ATMs, the state is simultaneously advancing initiatives to integrate cryptocurrency into its financial strategy.

Lawmakers have proposed establishing a strategic Bitcoin reserve, aligning with a growing trend among U.S. states to diversify state treasuries with digital assets.

This move is similar to proposals in New Hampshire and Pennsylvania, with advocates arguing that Bitcoin can serve as a hedge against inflation and economic instability.

The push for Bitcoin reserves gained momentum following former President Donald Trump’s campaign pledge to position the U.S. as a global leader in cryptocurrency.

While lawmakers work to protect consumers from fraud, they also recognize the long-term potential of digital assets in shaping the future of finance.

As North Dakota moves forward with its legislative efforts, the outcome of House Bill 1447 and the state’s broader crypto strategy could influence other states to approach digital assets with a balance between regulation and innovation.