North Dakota Senate Passes Bill to Regulate Crypto ATMs with Transaction Limits

The North Dakota Senate has passed a bill aimed at regulating crypto ATMs, introducing daily transaction limits and new fraud prevention measures, in response to growing concerns over scams and criminal activity.

New Regulation on Crypto ATMs

On March 18, the North Dakota Senate passed House Bill 1447 in a decisive 45-to-1 vote. Initially introduced to the state’s legislative assembly on January 15, the bill aims to regulate crypto ATMs to protect state residents from scams and other fraudulent activities.

The legislation includes a number of provisions, most notably the requirement for crypto ATM operators to be licensed as money transmitters in the state. This means operators will have to comply with regulations similar to those imposed on traditional financial services.

The bill also introduces daily transaction limits for users of crypto ATMs. Initially, the bill set a $1,000 per day limit, but following discussions in the state’s House committee, this was increased to $2,000 per day for the first five transactions within 30 days. The Senate, however, passed a revised version, capping the daily withdrawal limit at $2,000.

In addition to transaction limits, the bill mandates that crypto ATM operators use blockchain analytics to monitor and report suspicious activity to the authorities. This is intended to detect and prevent fraudulent activity, providing greater transparency and security for users. Operators will also be required to provide quarterly reports on kiosk locations, names, and transaction data.

A Step Toward Consumer Protection

The bill’s primary sponsor, House Representative Steve Swiontek, emphasized during a January 22 committee hearing that the lack of protective measures at crypto ATMs has allowed criminals to exploit these machines for theft. By implementing regulations such as fraud warnings and transaction monitoring, the state aims to reduce the risk of scams and protect consumers.

North Dakota’s efforts to regulate crypto ATMs come as part of a wider trend of government action against crypto-related fraud. On March 13, Nebraska Governor Jim Pillen signed similar legislation, the Controllable Electronic Record Fraud Prevention Act, designed to combat fraud in the state.

Additionally, U.S. Senator Dick Durbin of Illinois proposed similar federal legislation on February 25. Durbin’s bill was inspired by a constituent’s experience with a scam involving a crypto ATM. The constituent was duped into paying a $15,000 fine through a crypto ATM to avoid arrest, underscoring the growing risks associated with unregulated crypto machines.

The need for regulation is underscored by a report from the Federal Trade Commission (FTC), which revealed that fraud losses at Bitcoin ATMs increased nearly tenfold from 2020 to 2023, surpassing $65 million in the first half of 2024 alone. The FTC also noted that consumers aged 60 and older are three times more likely to fall victim to scams involving crypto ATMs.

U.S. Leading the Crypto ATM Market

Despite concerns about fraud, the U.S. remains the global leader in crypto ATMs, with 29,822 machines, representing 78% of the worldwide market. Canada follows with 3,486 crypto ATMs (9.2% of the market), and Australia ranks third with 1,613 machines, making up 4.3% of the market.

The bill now heads back to the House for approval of the Senate’s revisions. Once passed, it will be sent to North Dakota Governor Kelly Armstrong for final approval, where he can either sign it into law or veto the bill.

If enacted, House Bill 1447 will mark a significant step toward regulating the rapidly growing crypto ATM market, offering enhanced protections for consumers and aiming to curb fraudulent activities related to crypto machines.