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North Dakota Considers Bill to Protect Consumers from Crypto ATM Scams
Lawmakers in North Dakota are debating a bill aimed at introducing consumer protections to combat scams involving cryptocurrency ATMs. The proposed legislation, House Bill 1447, seeks to safeguard residents from financial scams by regulating transaction fees, capping daily withdrawals, and mandating fraud warning notices on crypto ATMs.
Understanding Crypto ATMs and the Risks
Crypto ATMs are kiosks at physical locations that allow users to convert cash into cryptocurrencies and vice versa. However, the limited regulation surrounding these machines and the anonymity provided by cryptocurrency transactions have made them increasingly susceptible to exploitation by scammers.
According to Lisa Kruse, North Dakota’s Department of Financial Institutions Commissioner, locals filed 103 crypto scam complaints with the FBI in 2023 alone, resulting in reported losses of $6.5 million. The Federal Trade Commission data shows that scam incidents in the United States have surged over tenfold between 2020 and 2023.
Proposed Protection Measures
The bill proposes various protection measures, including:
- Capping daily withdrawals at $1,000
- Limiting transaction fees to $5 or 3% of the transaction amount, whichever is higher
- Mandating fraud warning notices on crypto ATMs to alert users of common scam tactics
- Requiring kiosk operators to acquire a license and comply with requirements applicable to money transmitters under state law
- Submitting quarterly reports to the state commissioner
- Ensuring kiosks are placed in commercially accessible areas, are accessible to users with mobility limitations, and are equipped with adequate security measures
Users will also be notified of the irreversible nature of crypto transactions so they’re aware that funds, once sent, may not be recoverable.
Industry Support and Regulatory Efforts
The bill has received support from committee members and industry representatives, although some have expressed concerns about the proposed transaction limits and fee caps. Regulators globally have moved to tighten oversight of the sector, with concerns over money laundering and unregulated operations remaining at the forefront.
Similar initiatives have been launched in other regions, including a collaboration between the Niagara Regional Police and major kiosk operators in Ontario, Canada, to issue warnings on crypto ATM machines. Authorities in Germany have also carried out nationwide raids to crack down on unlicensed crypto ATM operations.
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