North Dakota Senate Approves Crypto ATM Regulations with $2,000 Daily Limit

TLDR

• North Dakota Senate passed a bill regulating crypto ATMs, capping daily transactions at $2,000
• House Bill 1447 requires operators to be licensed as money transmitters and use blockchain analytics to monitor suspicious activity
• Fraud through Bitcoin ATMs has increased nearly tenfold from 2020 to 2023, with consumers aged 60+ most vulnerable
• Similar legislation has been passed in Nebraska and proposed at the federal level
• The bill aims to protect North Dakota residents from scams, requiring operators to issue fraud warnings and submit quarterly reports

North Dakota is close to establishing new regulations for cryptocurrency ATMs following the state Senate’s approval of House Bill 1447. The bill passed on March 18 with a 45-to-1 vote. It aims to protect residents from the growing problem of crypto ATM scams.

The legislation would cap daily transactions at $2,000 per user across an operator’s network of ATMs. This limit is tighter than what the House had previously approved. The original bill set a $1,000 daily limit, which the House later loosened to $2,000 for the first five transactions within 30 days.

House Bill 1447 was first introduced to the state’s legislative assembly on January 15. The bill’s primary sponsor, Representative Steve Swiontek, pointed out that crypto ATMs currently lack protection measures. This has “allowed criminals to exploit them for theft,” he said during a House committee hearing.

The bill requires crypto ATM operators to obtain money transmitter licenses in North Dakota. This is a key requirement for anyone wanting to run these machines in the state. The licensing process will help ensure operators meet certain standards.

Operators must also display fraud warning notices on their machines. These warnings would alert users to potential scams and provide information on what to do if they suspect fraud. Clear terms and conditions, including fees and exchange rates, must be shown before transactions.

Consumer Protection Measures

The law would make operators use blockchain analytics tools. These tools help monitor for suspicious activity like fraud. Operators would need to report such activity to authorities when detected.

Quarterly reports on kiosk locations, names, and transaction data would be required. This reporting helps authorities track the use of these machines across the state. Additionally, each operator must appoint a compliance officer.

The bill will need to return to the House for approval of the Senate’s changes. After that, North Dakota Governor Kelly Armstrong will decide whether to veto or sign it into law. If signed, it will create a regulatory framework for the industry.

The legislation comes amid growing concerns about crypto ATM scams nationwide. The Federal Trade Commission reported that fraud losses at Bitcoin ATMs increased nearly tenfold from 2020 to 2023. Losses topped $65 million in the first half of 2024 alone.

Consumers aged 60 and older are three times more likely to fall victim to these scams. In North Dakota, more than $6 million was stolen through cryptocurrency fraud in 2023, according to AARP North Dakota.

A report by TRM Labs found that crypto ATMs have helped facilitate at least $160 million in illicit transactions since 2019. Law enforcement agencies worldwide view these machines as a major money laundering and scam risk.

The United States leads the world in crypto ATM installations. According to Coin ATM Radar data, the US has 29,822 machines, representing 78% of the global market. Canada ranks second with 3,486 machines (9.2%), and Australia is third with 1,613 machines (4.3%).

Bitcoin ATMs in United States

Similar legislation has been enacted in other states. Nebraska Governor Jim Pillen signed the Controllable Electronic Record Fraud Prevention Act into law on March 13. This law has similar goals of combating crypto-related fraud.

At the federal level, US Senator Dick Durbin of Illinois has proposed similar legislation. He cited a constituent’s story as motivation. The constituent had fallen prey to a scammer who claimed authorities had issued an arrest warrant but offered to let them avoid jail by making a $15,000 deposit at a crypto ATM.

The North Dakota bill is supported by AARP North Dakota as part of its ongoing efforts to fight fraud. The organization has urged state lawmakers to pass the bill to protect older North Dakotans from having their life savings stolen.

The number of crypto ATMs in the US has remained relatively flat since 2022, despite Bitcoin’s price growth in 2024. This suggests that increased regulatory scrutiny may be impacting the industry’s expansion.