North Dakota Moves Towards Regulating Crypto ATMs
The state of North Dakota is on the brink of implementing a comprehensive licensing framework for cryptocurrency ATMs following the passage of a significant bill by its Senate. Initially introduced on January 15, House Bill 1447 is designed to enhance consumer protection against potential scams associated with these machines.
The proposed legislation mandates that operators of crypto ATMs must provide on-screen warnings about fraud risks to users. Furthermore, they are required to obtain money transmitter licenses, which will help ensure that they comply with state regulations. In addition, operators must utilize blockchain analytics software to identify and combat fraudulent activities effectively. To maintain transparency, the bill also requires operators to submit quarterly reports detailing the locations of their kiosks and the transactions occurring at each site. An essential aspect of the regulation is the appointment of a compliance officer by each operator to oversee adherence to these new standards.
A study conducted by TRM Labs highlights the alarming reality that crypto ATMs have been implicated in facilitating over $160 million in illicit transactions since 2019. This statistic has raised concerns among law enforcement agencies worldwide, who view these ATMs as significant conduits for money laundering and various scams. Additionally, data from the Federal Trade Commission (FTC) indicates a nearly tenfold increase in losses stemming from bitcoin ATM scams since 2020, further underscoring the need for regulatory measures.
Across the Atlantic in the United Kingdom, the Financial Conduct Authority (FCA), which serves as the nation’s financial markets regulator, has intensified its scrutiny of the crypto ATM sector. The FCA has been actively cracking down on unregistered operators, and in 2024, it charged Olumide Osunkoya for his involvement in operating illegal crypto ATMs that processed a staggering $3.4 million. This case marked a significant milestone as the first prosecution of its kind in the UK. Recently, Osunkoya was sentenced to four years in prison for his role in the illegal crypto ATM network and was also found guilty of forgery, using false identity documents, and possessing criminal property.
Despite the rising instances of fraud and increasing regulatory oversight, the growth of crypto ATMs has stagnated, even as Bitcoin’s price has shown signs of recovery in 2024. According to market data from CoinATMRadar, the number of crypto ATMs in the United States has remained relatively constant since 2022, indicating a cautious approach from operators in a challenging regulatory environment.
