North Dakota's Department of Financial Institutions is advocating for a new bill aimed at regulating virtual currency money transmitters, particularly focusing on the oversight of crypto ATMs. During a recent meeting of the House Industry, Business and Labor Committee, officials highlighted the need for clearer regulations to combat a significant rise in fraud, especially targeting the elderly population.

The proposed amendment seeks to integrate oversight of crypto ATMs into existing state laws, specifically North Dakota Century Code 1309.1. This move is intended to enhance consumer protection and provide enforcement authority against fraudulent activities. The department noted a staggering 45% increase in crypto fraud losses from 2022 to 2023, amounting to $5.6 billion nationwide, with a significant portion of these losses affecting individuals over 60 years old.

Officials expressed concern over the ease with which fraudsters exploit crypto ATMs, often convincing victims to deposit cash directly into machines, which immediately transfers funds to the fraudsters' wallets. To address this issue, the department is proposing limits on transactions and improved consumer alerts at these machines. The average loss reported by North Dakota victims was over $60,000, underscoring the urgency for protective measures.

The committee discussed the balance between necessary regulation and the potential impact on the growing cryptocurrency industry. Some members raised concerns about the proposed $1,000 transaction limit, questioning its necessity given other fraud prevention measures being implemented. However, officials argued that such a cap is essential to prevent significant losses in a single transaction.

The department is open to collaborating with the committee to refine the bill, aiming for a regulatory framework that protects consumers while allowing the cryptocurrency sector to thrive. As discussions continue, the focus remains on safeguarding vulnerable populations from the rising tide of financial fraud linked to virtual currency transactions.