The state of Nebraska has recently taken significant strides to safeguard its residents from the alarming increase in cryptocurrency-related fraud, particularly in the realm of crypto ATMs. On March 12, Governor Jim Pillen signed into law the ‘Controllable Electronic Record Fraud Prevention Act,’ aimed at addressing the escalating issues surrounding crypto kiosks and ATMs. This legislation reflects a proactive approach to enhance consumer protections in an emerging and rapidly evolving industry.
Governor Pillen emphasized the importance of creating a secure environment for cryptocurrency operations in Nebraska, indicating, “Cryptocurrency is an important, emerging industry, and we’ve been working hard to build Nebraska into a cryptocurrency leader.” The governor further highlighted the need for “guardrails” to prevent crimes that exploit unsuspecting Nebraskans.
According to a report by the Federal Trade Commission, victims have lost over $65 million to crypto ATM fraud just in the first half of 2024. The report indicates a staggering nearly tenfold increase in fraud losses associated with Bitcoin ATMs since 2020, underscoring the urgent need for regulatory measures.
The newly enacted bill, designated as LB 609, mandates that all crypto ATM and kiosk operators must secure a license in accordance with Nebraska’s Money Transmitters Act. This includes registration and approval from the Department of Banking and Finance, as well as the submission of quarterly reports detailing kiosk locations, transaction data, and operational metrics.
Furthermore, the legislation imposes transaction limits: new users are capped at $2,000 per day, while established customers may transact up to $5,000 daily. Additionally, transaction fees are restricted to a maximum of 18% of the transaction value. For those unfortunate enough to fall victim to fraud, new customers reporting within 90 days are entitled to a full refund, including fees, while existing users can also reclaim fees tied to fraudulent activities.
In an effort to bolster consumer education and awareness, the bill also stipulates that operators must visibly display fraud warnings and appoint a compliance officer dedicated to enforcing anti-fraud measures. This reflects a broader shift towards ensuring transparency and accountability within the crypto ecosystem.
Interestingly, the U.S. crypto ATM landscape has seen a notable contraction, with over 1,200 machines being decommissioned recently following the introduction of similar legislation in Illinois. This trend may suggest a growing recognition of the need for regulatory oversights in the face of rising fraudulent activities.
Nebraska’s Department of Banking director, Kelly Lammers, reiterated the state’s commitment to maintaining a vigilant stance against fraud, asserting that, “Nebraska is open for business in the cryptocurrency space” while simultaneously reinforcing efforts to monitor and protect its citizens from exploitation.
While Nebraska is making strides in establishing a regulatory framework, it has yet to join the ranks of the 21 U.S. states actively proposing legislation to set up strategic crypto reserves. As the landscape continues to evolve, Nebraska’s actions may pave the way for more robust consumer protections in the cryptocurrency domain.
