KEY FACTS: The North Dakota Senate passed House Bill 1447 with a 45-to-1 vote, establishing a $2,000 daily transaction limit for crypto ATMs to combat rising fraud, which saw 103 reported scams and $6.5 million in losses in 2023. The legislation, awaiting House concurrence and Governor Doug Burgum’s signature, mandates that operators obtain money transmitter licenses, post fraud warnings, use blockchain analytics, provide live customer support, and submit quarterly transaction reports. Initially proposing a $1,000 cap, the bill was adjusted to balance security and usability, aligning North Dakota with states like Nebraska in tightening crypto ATM regulations.
Source: The Seal of North Dakota
North Dakota Senate Approves Crypto ATM Bill
The North Dakota Senate has passed a bill aimed at tightening oversight of crypto ATMs across the state. The legislation, known as House Bill 1447, cleared the Senate on March 18 with an overwhelming 45-to-1 vote, showing wide bipartisan support for measures designed to curb fraud while maintaining accessibility to digital assets. The bill now awaits further consideration in the House before it can be sent to Governor Doug Burgum’s desk for final approval.
The centerpiece of HB 1447 is a provision that caps daily transactions at crypto ATMs to $2,000 per user. This limit marks a shift from earlier iterations of the bill, which had proposed a stricter $1,000 daily cap before lawmakers adjusted it to strike a balance between security and usability. The Senate’s decision to reinstate and finalize the $2,000 ceiling reflects growing concerns over the rising tide of scams linked to these machines, which have become a popular avenue for both legitimate cryptocurrency enthusiasts and fraudsters alike.
The push for regulation was in response to mounting evidence of financial losses tied to crypto ATM scams. During a January 22 hearing, North Dakota’s Financial Institutions Commissioner, Lisa Kruse, highlighted the severity of the issue, noting that 103 crypto-related scam complaints were filed with the FBI in 2023 alone. These incidents resulted in reported losses totaling $6.5 million for North Dakota residents, underscoring the need for stronger safeguards.
Crypto ATMs, often found in convenience stores, gas stations, and other retail locations, allow users to buy and sell digital currencies like Bitcoin with cash or debit cards. While they offer convenience and immediacy, their largely unregulated nature has made them a prime target for exploitation. Scammers have increasingly used these machines to trick victims, particularly the elderly, into depositing cash under pretenses, such as promises of investment returns or urgent payment demands. Once the funds are converted to cryptocurrency and transferred, they become nearly impossible to trace or recover.
HB 1447 seeks to address these vulnerabilities by introducing a suite of protective measures. Beyond the $2,000 daily transaction limit, the bill mandates that crypto ATM operators obtain a money transmitter license from the state, aligning their operations with established financial regulations. Operators will also be required to post prominent fraud warning notices at their kiosks, ensuring users are alerted to potential risks before completing transactions.
The legislation does not stop at transaction caps and licensing. It imposes additional obligations on operators to enhance transparency and accountability. Under the new rules, companies running crypto ATMs must submit quarterly reports detailing the locations of their machines, the names of the operators, and comprehensive transaction data. This requirement aims to give regulators a clearer picture of the crypto ATM landscape in North Dakota and enable quicker identification of suspicious activity.
Another key provision mandates the use of blockchain analytics, a sophisticated tool that tracks cryptocurrency transactions on public ledgers, to detect and flag potential fraud. By leveraging this technology, operators can identify patterns indicative of scams, such as rapid transfers to known illicit wallets, and take preemptive action to protect consumers.
The bill also stipulates that operators provide live customer support during weekday hours, from 8 a.m. to 10 p.m. Central Time. This measure ensures that users have access to immediate assistance if they encounter issues or suspect fraudulent activity, a feature that lawmakers hope will bolster trust in the machines.
HB 1447 was first introduced in January by the North Dakota House, where it underwent several rounds of debate and amendment. Initially, the bill proposed a $1,000 daily transaction limit alongside a restriction of five transactions per user within 30 days. However, after feedback from stakeholders and further deliberation, the House revised the cap to $2,000 and simplified the structure to a flat daily limit, a change the Senate has now endorsed.
The bill’s near-unanimous passage in the Senate shows a growing consensus among lawmakers that the cryptocurrency industry, while innovative, requires guardrails to protect the public. North Dakota’s move follows a similar trend in other states. Just last week, Nebraska Governor Jim Pillen signed into law a bill imposing stricter rules on crypto ATM operators, including licensing requirements and fraud prevention measures. Meanwhile, Illinois Senator Dick Durbin has proposed federal legislation targeting crypto ATM fraud, a sign that the issue is gaining traction at the national level.
If signed into law, HB 1447 will position North Dakota as one of the first states in the U.S. to establish a comprehensive regulatory framework for crypto ATMs. Proponents argue that the bill strikes a delicate balance: it preserves the state’s reputation as a business-friendly environment while addressing the real risks posed by unregulated financial technology. Critics, however, caution that the $2,000 daily limit could deter legitimate users, particularly those who rely on crypto ATMs for larger transactions, potentially driving business to less-regulated jurisdictions.
For North Dakota residents, the legislation promises greater security in an era where digital currencies are becoming increasingly mainstream. The state’s 103 reported scam cases in 2023 may represent only a fraction of the total incidents, as many victims hesitate to come forward. By capping transactions and enforcing stricter oversight, lawmakers hope to reduce the financial toll on vulnerable populations and restore confidence in the crypto ecosystem.
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