North Dakota Senate Approves Crypto ATM Bill with $2K Limit

The North Dakota Senate has recently passed a significant bill aimed at regulating cryptocurrency ATMs, reinstating a provision that limits daily transactions to $2,000 per user. This provision was initially removed by the state’s House but has now been reintroduced in the Senate’s version of the bill. The Senate voted overwhelmingly in favor of the legislation, with a decisive 45-to-1 vote on March 18.

Purpose of the Bill

The primary objective of Senate House Bill 1447 is to enhance consumer protection and mitigate the risks associated with cryptocurrency transactions. By implementing a set of new guidelines for crypto ATMs and their operators, the bill seeks to safeguard residents from potential scams and fraudulent activities. The legislation mandates that cryptocurrency operators obtain licenses in the state as money transmitters, thereby establishing a regulatory framework for the operation of these ATMs.

Transaction Limits and Regulations

One of the key features of the newly passed bill is the limitation on customer withdrawals across the network of crypto ATMs. The daily transaction cap is set at $2,000, which is a revision from the initial limit of $1,000 per day. A House committee had previously relaxed the restrictions, allowing for a $2,000 limit for the first five transactions within a 30-day period. However, the Senate has now firmly established the cap at $2,000 for all transactions.

Before becoming law, the bill must return to the House for a vote on the recent changes. Following this, North Dakota Governor Kelly Armstrong will have the option to either sign the bill into law or veto it. The legislation also includes provisions requiring operators to monitor for suspicious activities, such as fraud, and report any findings to the relevant authorities. Additionally, operators will be obligated to provide quarterly reports detailing kiosk locations, transaction data, and the names of the operators.

Background and Motivation for the Bill

The push for this legislation stems from growing concerns regarding the lack of protective measures surrounding crypto ATMs. During a committee hearing on January 22, House Representative Steve Swiontek, the bill’s primary sponsor, highlighted the vulnerabilities of these ATMs, stating that the absence of regulations has allowed criminals to exploit them for theft.

One notable case that underscored the need for this legislation involved a victim who fell prey to a scammer. The scammer falsely claimed that authorities had issued a warrant for the victim’s arrest and suggested that they could avoid jail by paying a $15,000 fine through a crypto ATM. This alarming incident served as a catalyst for the introduction of the new law.

Rising Fraud Losses at Crypto ATMs

According to data from the Federal Trade Commission, fraud losses associated with Bitcoin ATMs have surged nearly tenfold from 2020 to 2023, amounting to over $65 million in the first half of 2024 alone. Notably, consumers aged 60 and older are three times more likely to fall victim to such scams, highlighting the urgent need for protective measures.

Conclusion

The passage of Senate House Bill 1447 marks a significant step towards regulating cryptocurrency ATMs in North Dakota. By capping daily transactions at $2,000 and implementing stricter guidelines for operators, the state aims to protect its residents from the rising tide of scams and fraudulent activities associated with crypto transactions. As the bill moves back to the House for further consideration, the outcome will be closely watched by both supporters and critics of cryptocurrency regulation.