North Dakota to Create New Licensing System for Cryptocurrency ATMs

North Dakota is about to create a new licensing system for cryptocurrency ATMs. The state Senate passed House Bill 1447 on March 18 with a strong vote of 45 to 1.

North Dakota's Senate has passed a bill that would create a licensing system for cryptocurrency ATMs in the state. The bill, House Bill 1447, passed with a vote of 45 to 1. It now heads back to the House for another vote.

The bill, which was first introduced on January 15, aims to protect people from crypto scams by setting up rules for operators of the machines. It also includes measures to help detect and prevent financial crime.

“We have a responsibility to protect people from scams and to promote a level playing field for businesses that are operating in our state,” said Representative Steve Swiontek, who introduced the bill. “Cryptocurrency ATMs are a new technology that can be used for both good and bad, and we need to make sure that they are being used safely and responsibly in North Dakota.”

The bill would require crypto ATM operators to obtain money transmitter licenses, which would ensure they are following proper financial regulations. It would also limit daily transactions to $2,000 per user.

The legislation began with a $1,000 transaction limit, but the House committee broadened these limits last month. After the Senate’s changes, the bill must return to the House for another vote.

If approved by the House, the bill would then go to North Dakota Governor Kelly Armstrong, who can either sign it into law or veto it.

The bill would require operators to post fraud warnings on the machines’ screens, alerting users to scams before they complete transactions. Many scam victims have reported being directed to crypto ATMs to send money to criminals.

“It is becoming increasingly common for scammers to target older adults and other vulnerable populations with Bitcoin ATM scams,” said FTC Chair Lina M. Kline. “These scams have risen sharply, and we are urging everyone to be aware of these scams and to report them to the FTC.”

The bill would also require operators to use blockchain analytics software, which helps to detect and fight fraud by tracking suspicious transactions. Operators would be required to report any suspicious activity to the appropriate authorities.

In addition, operators would be required to submit quarterly reports on the kiosks' locations and transactions. These reports would provide regulators with better visibility into how crypto ATMs are being used across the state.

Each operator would need to appoint a compliance officer, who would be responsible for ensuring that the company is following all of the new regulations.

The legislation comes as authorities are seeing a rise in crypto ATM scams. TRM Labs found that crypto ATMs may have facilitated at least $160 million in illegal transactions since 2019.

Law enforcement agencies see these machines as high-risk for money laundering. They are also a key part of broader scams, such as romance scams and tech support scams.

The new legislation is part of a broader effort by state and federal authorities to regulate the cryptocurrency industry.

Earlier this year, Nebraska passed the Controllable Electronic Record Fraud Prevention Act, which aims to prevent crypto scams and theft. The Act, signed by Governor Jim Pillen on 13 March, imposes obligations on crypto ATM operators to verify the identity of users and to provide anti-fraud warnings.

At the federal level, Senator Dick Durbin of Illinois has proposed similar legislation that would require crypto ATM operators to register with the Treasury Department and to provide anti-fraud warnings to users.

Durbin was moved to act after a constituent lost $15,000 through a crypto ATM scam. The scammer had claimed that there was an arrest warrant for the constituent's daughter, which could be cleared by paying a fine via crypto.

Despite Bitcoin's price growth in 2024, the number of crypto ATMs in the U.S. has remained flat since 2022. The United States has 29,822 machines, which represents 78% of the global market. Canada ranks second with 3,486 machines (9.2%), while Australia is third with 1,613 (4.3%).

In the United Kingdom, authorities have increased scrutiny on unregistered crypto ATM operators. The Financial Conduct Authority recently prosecuted Olumide Osunkoya for running illegal crypto ATMs that processed $3.4 million. Osunkoya received a four-year sentence for this and related crimes.