North Dakota Lawmakers Propose Bill to Implement New Restrictions on Crypto ATMs

Highlights:

• North Dakota’s House Bill 1447 proposes stricter regulations on crypto ATMs to protect residents.
• Some argue that proposed withdrawal limits and fees could lead to a de facto ban. 
• In 2023, North Dakota residents lost $6.5M to crypto scams, with 103 complaints filed.

On January 22, North Dakota lawmakers discussed House Bill 1447, introduced on January 15. The bill aims to regulate crypto ATMs to protect residents from scams. It includes limits on withdrawals of $1,000 per day, transaction fees of $5 or 3% (whichever is higher), and requires fraud warning notices on the machines.

U.S. state of North Dakota considers capping crypto ATM transactions to combat fraud

Lawmakers in the U.S. state of North Dakota are discussing a recently introduced bill that seeks to cap crypto ATM transactions in a bid to crack down on fraud, Cointelegraph reported. The…

— CoinNess Global (@CoinnessGL) January 23, 2025

House Representative Steve Swiontek, the bill’s main sponsor, highlighted that crypto ATMs lack the security features of traditional money ATMs. This makes it easier for scammers to target victims. “Unfortunately, this has allowed criminals to exploit them for theft,” Swiontek said at the hearing.

Debate Over Crypto ATM Limits Intensifies

Advocates, such as Josh Askvig from the American Association of Retired Persons, back the bill to shield older residents from falling prey to scams.  On the other hand, Kevin Lolli, assistant general counsel for CoinFlip, a crypto ATM operator, supported the consumer protection measures. However, he disagreed with the proposed fee and withdrawal limits. He explained that ATM operational costs, like maintenance, transport, and payments to hosting businesses, lead to fees of 8% to 20%.

“The proposed North Dakota fee limits do not take into consideration these unique operational costs and are a de facto ban of virtual currency kiosks in North Dakota,” Lolli told lawmakers. 

CoinFlip currently reports suspicious transactions over $2,000 to federal authorities and all currency transactions exceeding $10,000. Lolli argued that limiting transaction amounts might encourage customers to use multiple kiosks, which, he explained, could undermine existing anti-money laundering efforts. Kruse asked why operators don’t report suspicious transactions under $2,000.

She said:

“If they know about fraud, why would they not call on law enforcement, or report it? I think that is not a valid argument and it actually makes me kind of annoyed.”

Jacob Rued, a fraud investigator for First Western Bank and Trust, supported the bill. He emphasized the importance of transaction limits for consumer protection. He shared an example of a Minnesota man who withdrew $50,000 to deposit into a crypto kiosk for a scammer. However, a $2,000 transaction limit stopped him, making him reconsider. “Without that, he would’ve lost all $50,000,” he said.

North Dakota Residents Face $6.5M Loss in Crypto Scams

North Dakota’s Department of Financial Institutions Commissioner, Lisa Kruse, informed the House Industry, Business, and Labor Committee that residents filed 103 crypto scam complaints to the FBI in 2023. The reported losses totaled $6.5 million. In September, the FBI revealed that Americans lost $5.6 billion to crypto fraud in the same year. It also recorded 5,500 cases involving crypto ATMs, with losses exceeding $189 million.

Rising Crypto Scams Drive Global Crackdown on ATM Fraud

On January 21, the Niagara Regional Police announced a similar initiative, stating they would work with major kiosk operators in Ontario, Canada, to place warnings on crypto ATM machines. In August, authorities in Germany carried out raids nationwide targeting unlicensed crypto ATM operations. The crackdown resulted in the seizure of approximately $28 million in cash and 13 kiosks.