Committee hears competing views on regulating cryptocurrency kiosks; AARP, banks and law enforcement urge limits, operators oppose caps

House Industry, Business and Labor Committee members opened a hearing on House Bill 1447, which would impose licensing, consumer-disclosure and operational requirements on virtual-currency kiosks commonly called cryptocurrency ATMs.

Representative Steve Swiatek, the bill sponsor, said kiosks have proliferated in retail locations and are being used in scams that direct victims to withdraw cash and load it into a kiosk to transfer funds into a criminal-controlled crypto wallet. “There was $6,000,000 that were fraudulently taken away from North Dakotans,” Swiatek told the committee, describing cases in which victims attempted to deposit large sums at kiosks after being coerced by fraudsters.

Josh Askvig, state director for AARP, testified HB 1447 is based on AARP model language and urged consumer protections including licensing, prominently posted fraud warnings and a daily transaction limit. Askvig cited FBI and AARP data showing large dollar losses nationwide and in North Dakota and said kiosks lack the consumer safeguards common to depository institutions. He said the bill requires paper receipts, visible anti-fraud messaging, fee disclosures and a $1,000 daily per-vendor transaction cap in its current form.

Lisa Cruz, commissioner of the Department of Financial Institutions, testified in support and proposed an amendment to place the kiosk rules in the money-transmitter statute (NDCC 13-09.1) where the department already regulates virtual-currency money transmitters. Cruz told the committee the department and banks have reported increases in elder-targeted fraud and that crypto kiosk complaints in North Dakota have included substantial per-person losses; she reiterated that reporting thresholds and suspicious-activity reporting should not be construed to excuse nonreporting by operators who know of possible fraud.

Banks, community bankers and a fraud investigator testified in favor of the bill. Rick Kleberg of the North Dakota Bankers Association and fraud investigator Jacob Rood of First Western Bank described real-world cases. Rood said the bill strikes a reasonable balance by preserving legitimate access while limiting kiosk-driven losses: he described a Minnesota case in which a $50,000 deposit attempt was stopped when a state limit kicked in and the victim recovered most of the funds.

Consumer and elder advocates and the Department of Financial Institutions advocated for: licensing of kiosk operators as money transmitters; conspicuous fraud warnings and steps for victims; quarterly reporting of kiosk locations and transactions; paper receipts containing operator identity and transaction details; blockchain analytics for tracing deposits; a requirement that operators refund fraudulent transactions when identifiable; and a daily transaction limit (the draft sets $1,000 per vendor per day).

Industry witnesses including Ethan McClelland of Bitcoin Depot and Kevin Lawley of CoinFlip acknowledged many consumer-protection provisions but opposed the $1,000-per-day transaction limit, the proposed fee cap (the draft sets a maximum of $5 or 3%, whichever is higher) and a mandatory full-refund requirement. Industry witnesses said low transaction limits could push bad actors to “structure” deposits across machines and thereby reduce law-enforcement reporting; they also said a 3% cap would be the country’s lowest and could force compliant operators to leave the state, leaving less-regulated operators in place. Industry witnesses also described kiosk operational costs—hardware, armored cash transport, compliance, blockchain analytics and live customer support—and asked for additional time to negotiate detailed language.

Opposition testimony included Satoshi Action Fund and online witnesses who urged tailored regulation that requires licensure, robust compliance programs, highly visible warnings, required blockchain analytics and live customer support but warned that strict caps and a full-refund mandate could create perverse incentives.

Committee members asked clarifying questions about transaction reporting, federal SAR/CTR thresholds (FinCEN rules), who bears costs, fee levels and how daily limits interact with federal reporting. The Department of Financial Institutions said money transmitters already file suspicious-activity reports where appropriate and that structuring over several days can itself be suspicious and reportable.

Committee members signaled there is work to do: Representative Koppelman and other members agreed to engage with the sponsor, DFI and stakeholders to refine the bill. No final committee vote was taken; members agreed to continue negotiations and possible amendments in committee work sessions.