Regulators in North Dakota are discussing a new bill that will introduce various safeguards designed to help protect locals from falling victim to scams involving crypto ATMs.
On January 22, the North Dakota state’s legislative assembly debated signing a bill that would require crypto ATMs to issue fraud warning notices and make it mandatory for operators to acquire a license in order to be able to offer services to locals, among others.
House Bill 1447 was first presented on January 15 by House Representative Steve Swiontek to mitigate losses from scams and fraudulent crypto-related offerings that have surged in recent years.
Crypto ATMs or kiosks are physical machines that allow users to convert cash into cryptocurrencies or exchange cryptocurrencies for cash. These are set up in publicly accessible locations and function like traditional ATM machines but are tailored for crypto.
According to Swiontek, crypto ATMs lack the safeguards typically associated with traditional ATMs due to the regulatory grey area in which they often operate.
As such, bad actors often ask victims to use these machines to transfer funds or ransom payments, exploiting their anonymity to carry out fraudulent schemes.
Notably, locals have filed several complaints with the FBI after being a target of such circumstances.
North Dakota’s Department of Financial Institutions Commissioner, Lisa Kruse, estimated that roughly $6.5 million was lost across 103 reported incidents, which often involve the use of crypto ATMs.
These scams often target the elderly, who are less tech-savvy and unaware of the caveats of crypto transactions.
John Askvig, the state director of the American Association of Retired Persons, emphasized this during the hearing, stating that the bill will play a key role in protecting vulnerable populations, particularly older residents, from having their life savings stolen by scammers.
What does Bill 1447 propose?
If passed, the bill would require warning prompts to be shown on kiosks alerting users of the potential risks involved with cryptocurrency transactions, such as their irreversible nature.
The prompt would also require machines to warn users of common scam tactics and advise them to contact law enforcement if they believe they are being scammed.
Users will have to agree that they understand these risks before they are allowed to proceed with their transactions.
Further, it would impose a cap on daily withdrawal limits at $1000 for both fiat and crypto, while transaction fees will be capped at $5 per transaction or 3% of the total amount, whichever is higher.
Kiosk operators will be required to secure an operating license, submit quarterly reports to the state commissioner, designate a compliance officer, and comply with local regulations that encompass money transmitters.
Meanwhile, crypto ATMs will only be allowed to be installed in publicly accessible areas with proper surveillance measures in place.
Users will also be entitled to a refund if they contact the kiosk operator or related government agency within 90 days of a fraudulent transaction.
So far, the bill has received support from several agencies, according to local media.
Unregistered crypto ATMs on the rise
The crypto ATM market has continued to expand over the years, with Coin ATM Radar showing 37156 installed across 65 countries as of publication time.
As previously reported by Invezz, the market for crypto ATMs is expected to surpass $2.5 billion by 2032 as cryptocurrencies become more accepted globally.
However, alongside this growth, there has been an uptick in illegal crypto ATM operators across several jurisdictions.
This led to enforcement actions from law enforcement agencies in multiple countries.
For instance, in December 2024, the Australian Transaction Reports and Analysis Centre announced a new task force that would crack down on kiosk operators that don’t comply with Australia’s anti-money laundering and counter-terrorism financing laws.
Germany also carried out several raids last year and managed to seize 13 crypto ATMs that were operating illegally.
Similarly, the Financial Conduct Authority has clarified that no crypto ATMs are legally operating in the country.
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