Nebraska Governor Jim Pillen Signs Legislation to Combat Cryptocurrency Fraud
Proposal aims to enhance protections around cryptocurrency ATMs as fraud rates soar
In a significant move to protect consumers in the cryptocurrency space, Nebraska Governor Jim Pillen has officially signed new legislation aimed at combating surging cryptocurrency fraud linked to automated teller machines (ATMs) specialized in digital currencies. The bill, known as the "Controllable Electronic Record Fraud Prevention Act," was enacted on March 12, 2024. "Cryptocurrency is an important, emerging industry, and we’ve been working hard to build Nebraska into a cryptocurrency leader,” Governor Pillen stated during the signing ceremony. “An important part of these efforts is to make sure that we have guardrails to prevent criminals from taking advantage of Nebraskans,” he added, emphasizing the need for controlled growth in the industry.
Legislative Details
The bipartisan bill, designated as LB 609, was introduced by Senator Eliot Bostar on January 22, 2024. Its primary goal is to regulate cryptocurrency ATM and kiosk operations, ensuring that adequate measures are in place to prevent fraud. Under this legislation, operators of crypto ATMs must be licensed according to Nebraska’s Money Transmitters Act and must secure approval from the Department of Banking and Finance.
Key provisions of the new law include:
-
Licensing and Reporting: All crypto ATM and kiosk operators are required to maintain licenses and provide comprehensive quarterly reports that include kiosk locations and transaction details.
-
Transaction Limits: The law imposes a limit on daily transactions at $2,000 for new users and $5,000 for returning customers, alongside a cap on service fees, which cannot exceed 18% of the transaction amount.
-
Fraud Refund Policy: New customers who report fraudulent activities within 90 days are entitled to receive a full refund, including any applicable fees. Existing customers can recoup fees associated with fraudulent transactions.
-
Safety Measures: Operators must display clear fraud warnings at their kiosks and designate a compliance officer dedicated to implementing and enforcing fraud prevention strategies.
Rising Crypto Fraud Concerns
The timing of this legislation comes amid disturbing reports concerning the rising incidence of fraud related to cryptocurrency ATMs. According to data from the Federal Trade Commission (FTC), victims lost over $65 million to crypto ATM fraud within the first half of 2024 alone. The FTC noted that fraud losses at Bitcoin ATMs skyrocketed nearly tenfold from 2020 to 2023. In a broader context, the U.S. crypto ATM market recently saw a reduction of more than 1,200 machines following the introduction of similar regulatory measures by Illinois Senator Dick Durbin, pointing to a growing trend of states addressing the issues posed by unregulated cryptocurrency transactions.
Official Statements
Nebraska’s Department of Banking Director Kelly Lammers expressed optimism concerning the new regulation, stating, “Nebraska is open for business in the cryptocurrency space. Those that target our citizens through crypto ATMs will soon have a team that will be watching even more closely.”
While Nebraska has established a framework for regulating cryptocurrency transactions, it has not yet joined the 21 U.S. states proposing legislation for strategic cryptocurrency reserves, as highlighted by the Bitcoin Reserve Monitor.
As the cryptocurrency industry continues to evolve, states like Nebraska are taking proactive steps to balance innovation and security in this rapidly growing sector.
Share this article:
