Regulators in North Dakota are discussing a new bill that would provide several safeguards designed to help protect local residents from falling victim to scams involving crypto ATMs.
On January 22, the North Dakota Legislative Assembly Discuss Signed a bill that would require crypto ATMs to issue fraud warning notices and make it necessary for operators to obtain a license in order to be able to provide services to local residents, among others.
House Bill 1447 was first foot on January 15 by House Representative Steve Suiontek to mitigate losses from scams and fraudulent crypto-related offers that have risen in recent years.
ATMs or crypto kiosks are physical machines that allow users to convert cash into cryptocurrencies or exchange cryptocurrencies for cash. They are set up in publicly accessible locations and function like traditional ATM machines but are specifically designed for encryption.
According to Swiontek, crypto ATMs lack the safeguards typically associated with traditional crypto ATMs due to the regulatory gray area in which they often operate.
As such, bad actors often ask victims to use these machines to transfer money or ransom payments, exploiting their anonymity to carry out fraudulent schemes.
Notably, local residents have filed numerous complaints with the FBI after being the target of such conditions.
Lisa Cross, commissioner of the Dakota Department of Financial Institutions, estimated that about $6.5 million was lost in 103 reported incidents, often involving the use of encrypted ATMs.
These scams often target the elderly, who are less surprised and unaware of crypto transaction warnings.
John Askvig, state director for the American Association of Retired Persons, emphasized this during the hearing, saying the bill would play a key role in protecting vulnerable populations, especially older populations, from having their life savings stolen.
What does Bill 1447 propose?
If passed, the bill would require warning prompts to be displayed on kiosks that alert users to potential risks involved in cryptocurrency transactions, such as their irreversible nature.
The claim would also require machines to warn users of common fraud 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.
Furthermore, it will cap daily withdrawal limits at $1,000 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, hire a compliance officer, and comply with local regulations involving money transmitters.
Meanwhile, the installation of encrypted ATMs will only be allowed in previously accessible areas with appropriate control measures.
Users are also entitled to a refund if they contact a kiosk operator or relevant government agency within 90 days of a fraudulent transaction.
So far, the bill has received support from several agencies, according to local media.
Unregistered ATMs are on the rise
The Crypto ATM market has continued to expand over the years, with ATM Radar showing 37,156 coins in 65 countries as of press time.
As previously reported by Invezz, the crypto ATM market is expected to exceed $2.5 billion by 2032 as cryptocurrencies become more accepted globally.
However, alongside this growth, there has been a rise in illegal ATM operators across many jurisdictions.
This led to enforcement actions from law enforcement agencies in multiple countries.
For example, in December 2024, the Australian Transaction Reporting and Analysis Center announced a new task force that would clamp down on kiosk operators not complying with Australia’s crypto finance and counter-terrorism laws.
Germany also carried out several raids last year and managed to seize 13 crypto ATMs that were operating illegally.
Likewise, the Financial Conduct Authority has clarified that there are no crypto ATMs operating legally in the country.
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