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Montana securities and consumer officials warn of rising crypto fraud, outline state policy options
Summary
Auditor’s office and CSI told the task force that crypto fraud and ATM‑facilitated scams are rising in Montana; CSI reported about $3.4 million in reported crypto losses in 2025 and recommended tools such as transaction limits, conspicuous warnings, receipt requirements and potential money‑transmitter licensing.
Kirsten Madsen, deputy securities commissioner, and Caitlyn Wenzel, policy analyst with the Montana Commissioner of Securities and Insurance, briefed the task force Feb. 12 on federal legislative developments and escalating crypto‑related fraud in the state.
Madsen summarized federal proposals — notably the House "Clarity Act" (three asset classes: digital commodities, investment‑contract assets, and stablecoins) and multiple Senate discussion drafts. She said the Clarity Act would split jurisdiction between the Commodity Futures Trading Commission and the Securities and Exchange Commission and create certification and market‑structure rules for spot trading, while stablecoin rules would be channeled to banking authorities. Madsen flagged that broad federal preemption of state registration could reduce Montana's registration revenues and affect the state's anti‑fraud tools.
Wenzel gave a consumer‑fraud presentation, citing national figures and in‑state casework. She said $9.3 billion was lost to crypto fraud nationally in 2024 and that crypto‑ATM losses in 2025 rose to about $333 million. She told the task force CSI has documented roughly 400 crypto ATMs in Montana (a majority operated by LibertyX), and she gave a Bozeman case study in which a victim was coerced to withdraw $36,000 and deposit it at multiple Bitcoin ATMs. Wenzel said Montana reported about $3.4 million in crypto‑scam losses in 2025 and observed cumulative reported losses of about $2 million in a single day this month in 2026.
Wenzel and Madsen presented policy options other states have adopted: daily transaction limits for new users, mandatory on‑screen warnings that transactions are irreversible and government agencies do not accept payment via ATMs, detailed receipts showing recipient wallet addresses, refund obligations with timely law‑enforcement reporting, money‑transmitter licensing for ATM operators, and use of blockchain analytics or live verbal confirmation for suspicious transactions.
During discussion, Montana banking representatives emphasized the role of human intervention (tellers and gas station attendants) and cited existing Montana statutes that permit delayed disbursement to pause suspect transactions. The DOJ and AG's office said law enforcement can trace and seize cryptocurrency with sufficient tooling and requested legislative changes to asset‑forfeiture/seizure authorities to improve recovery. Task force members discussed banning or heavily restricting crypto ATMs as one option, while noting federal legislation remains in flux.
The task force did not vote; chairs directed staff to include these findings and options in the July 1 report to the Economic Affairs Interim Committee and to pursue further workgroup analysis on enforcement and drafting options.
