North Dakota regulators are currently in discussions about a bill that aims to introduce consumer protections to combat scams involving cryptocurrency ATMs. This bill, known as House Bill 1447, was brought to the state’s legislative assembly earlier this month and is designed to address the increasing concerns surrounding the exploitation of crypto ATMs by scammers.
Crypto ATMs are kiosks located at physical locations that enable users to convert cash into cryptocurrencies and vice versa. However, the lack of regulation surrounding these machines, coupled with the anonymity offered by cryptocurrency transactions, has made them a prime target for criminals looking to launder money and carry out fraudulent activities.
Lisa Kruse, the Commissioner of North Dakota’s Department of Financial Institutions, highlighted the alarming number of crypto scam complaints filed in 2023, totaling 103 cases with reported losses of $6.5 million. These figures are part of a larger trend, as data from the Federal Trade Commission shows a tenfold increase in scam incidents in the United States between 2020 and 2023.
House Bill 1447 proposes several key 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. These notices will inform users of common scam tactics, advise them to contact law enforcement if they suspect fraudulent activity, and educate them on the irreversible nature of crypto transactions.
Additionally, the bill mandates that kiosk operators obtain a license, adhere to state laws applicable to money transmitters, and submit quarterly reports to the state commissioner. Operators must also ensure that their kiosks are located in commercially accessible areas, are equipped with adequate security measures, and are accessible to users with mobility limitations.
While the bill has received support from committee members and industry representatives like Kevin Lolli from CoinFlip, there are differing opinions on certain aspects of the proposed regulations. Some are in favor of the consumer protection measures but are against the transaction limits and fee caps.
Regulators worldwide are taking action to tighten oversight of the crypto ATM sector in response to the increasing number of fraud cases. In Ontario, Canada, the Niagara Regional Police announced a collaboration with major kiosk operators to issue warnings on crypto ATM machines. In Germany, authorities conducted nationwide raids to crack down on unlicensed crypto ATM operations, resulting in the seizure of $28 million in cash and 13 kiosks.
Overall, the regulatory efforts surrounding crypto ATMs are crucial in combating financial scams and protecting consumers from fraudulent activities in the cryptocurrency space.