At a hearing on January 22, North Dakota lawmakers considered House Bill 1447, which was introduced to the state legislature earlier this month.

The bill aims to set daily withdrawal limits, regulate transaction fees, and make it mandatory to include fraud warnings in cryptocurrency ATMs. These regulations are intended to protect state residents from financial frauds.

Crypto ATMs can be defined as physical kiosks that allow users to convert cash into cryptocurrencies and vice versa. However, limited regulations on these machines and the anonymity of cryptocurrency transactions lead to these tools being misused by fraudsters to divert illicit proceeds.

North Dakota Financial Institutions Commissioner Lisa Kruse announced that 103 crypto fraud complaints were filed with the FBI in the state in 2023, reporting a total loss of $6.5 million. According to data from the Federal Trade Commission (FTC), there was a tenfold increase in fraud cases across the USA between 2020 and 2023.

Representative Steve Swiontek, the primary sponsor of House Bill 1447, pointed out that due to the lack of current regulations, fraudsters can easily abuse crypto ATMs.

The bill includes measures such as limiting daily withdrawals to $1,000 and capping transaction fees at $5 or 3% of the transaction amount, whichever is higher.

Additionally, crypto ATMs will be required to include fraud alerts. These alerts will inform users about common fraud tactics and advise them to contact law enforcement in suspicious cases.

Users will be informed about the irreversible nature of crypto transactions and will also be reminded that funds sent may not be recovered.

New obligations will be introduced for kiosk operators. Operators must obtain a license and submit quarterly reports to comply with requirements applicable to money transfer entities under state law.

In addition, kiosks will need to be located in commercially accessible areas, be suitable for users with limited mobility, and be equipped with measures such as lighting and surveillance for security.

The bill received the support of committee members and industry representatives. CoinFlip’s Kevin Lolli stated that he supports consumer protection measures, but opposes transaction limits and fee caps.

With the rise of fraud cases linked to crypto ATMs, regulators around the world continue to take steps to further regulate the industry.

International initiatives also attract attention. In Canada’s Ontario province, Niagara Regional Police announced that it will issue fraud alerts at ATMs in collaboration with major kiosk operators.

In Germany, authorities conducted nationwide raids on unlicensed crypto ATM operations, and approximately $28 million in cash and 13 kiosks were seized in these operations.