Nebraska governor signs bill to regulate crypto ATMs, citing growing fraud
The rise of cryptocurrency has ignited both enthusiasm and concern as criminals exploit vulnerabilities in this burgeoning sector. Amid heightened incidents of fraud related to cryptocurrency ATMs, Nebraska’s Governor Jim Pillen has taken proactive steps by signing new legislation aimed at enhancing consumer protection.
On March 12, Governor Pillen announced the establishment of the “Controllable Electronic Record Fraud Prevention Act.” The bill, a product of bipartisan collaboration, is designed to address the alarming increase in crypto-related fraud by strengthening regulations around cryptocurrency ATM operations in the state. “Cryptocurrency is an important, emerging industry, and we’ve been working hard to build Nebraska into a cryptocurrency leader,” he stated, emphasizing the need for robust safeguards to protect citizens from exploitation.
According to the Federal Trade Commission (FTC), victims of crypto ATM fraud lost over $65 million in just the first half of 2024. The FTC reported a nearly tenfold increase in fraud losses at Bitcoin ATMs from 2020 to 2023. This staggering statistic underscores the urgency of the new legislation, which mandates that crypto ATM operators be licensed under Nebraska’s Money Transmitters Act and registered with the Department of Banking and Finance. Such operators will be required to submit quarterly reports detailing kiosk locations, transaction data, and names of involved parties.
Key provisions of the new law include transaction limits, capping new users at $2,000 per day and existing users at $5,000. It also imposes a fee limit of 18% on each transaction, fostering a more consumer-friendly environment. Refund policies are set in place for victims of fraud; new customers reporting issues within 90 days are eligible for full refunds, inclusive of fees, while existing users can receive refunds on fraudulent transactions’ associated fees.
Additionally, operators are obliged to post fraud warnings at their kiosks and to appoint compliance officers responsible for implementing fraud prevention measures. This move aims to create a more transparent and accountable cryptocurrency ecosystem within Nebraska.
Meanwhile, the national crypto ATM landscape has been contracting, with a notable decline of over 1,200 machines in the U.S. following similar legislative initiatives introduced by Illinois Senator Dick Durbin. These developments reflect a growing awareness among lawmakers regarding the need for regulatory oversight in the rapidly evolving cryptocurrency space.
Nebraska’s Director of Banking, Kelly Lammers, echoed a supportive stance towards cryptocurrency. “Nebraska is open for business in the cryptocurrency space,” she remarked, reinforcing the state’s commitment to fostering a secure environment for both consumers and businesses engaged in crypto.
Interestingly, while Nebraska is taking steps to regulate cryptocurrency more stringently, it has not yet joined the ranks of 21 U.S. states advocating for the establishment of strategic crypto reserves. As authorities ramp up efforts to protect citizens from fraud, the balance between fostering innovation and ensuring consumer safety remains a crucial topic for discussion within the state’s financial and legislative landscapes.
As the regulation of cryptocurrency continues to evolve across the United States, Nebraska’s proactive measures may serve as a model for other states grappling with similar challenges in safeguarding the interests of cryptocurrency users.
