Nebraska passes act on crypto ATMs to protect consumers

The Controllable Electronic Record Fraud Prevention Act has been signed into law in Nebraska. The law regulates cryptocurrency automatic teller machines (ATMs). It establishes conditions for operating crypto ATMs and provides consumer protections for ATM users.

The bill passed the state’s 49-member nonpartisan, unicameral legislature on March 6 with 48 votes in favor and one legislator  excused  from voting. Governor Jim Pillen signed the bill on March 11.

The act makes ATM operators liable for some fraud

Under the new  law , crypto ATM operators must have a money transmitter license. They are required to make their fees known in advance and post clear warnings about potential scams and other risks associated with cryptocurrency. New customers will be limited to $2,000 a day in transactions, and established customers will be allowed $10,500 a day. 

Operators will also have to have a refund policy for customers who report fraud within 30 days. New customers are eligible for a full refund on funds lost to fraud while existing customers would get fees returned.

Operators will be required to have a full-time compliance officer and an anti-fraud policy backed up by the use of blockchain analytics software. They will provide live customer service on weekdays from 7:00 a.m. to 9:00 p.m. and a “dedicated communication method” with law enforcement.

The governor spun the new law as support for the crypto industry. “We’ve been working hard to build Nebraska into a cryptocurrency leader. An important part of these efforts is to make sure that we have guardrails to prevent criminals from taking advantage of Nebraskans,” Pillen  said  in a statement announcing the bill’s signing. 

According to the American Association of Retired Persons (AARP), Nebraskans  reported  239 scams with cryptocurrency in 2023. They lost a cumulative $14.6 million in those scams. Real losses were probably much higher but unreported, the AARP added.

Nebraska has passed several acts affecting crypto

The bill was introduced by Eliot Bostar in January. The law will go into effect three months after the legislature adjourns for Spring. According to Bitcoinlaws.io, there is no other Bitcoin-related legislation currently being considered in the state.

There is, however, a bill introduced at the request of the governor that would impose a 2.5-cent per kWh excise tax on cryptocurrency mining operations consuming over 1,000 kWh annually and allow public power districts to require financial assurances from these operations, among other things. That bill is  currently  in hearings.

Bostar introduced the Adopt the Blockchain Basics Act, which  would have regulated cryptocurrency mining, custody, and trading, in 2023. That bill was carried over into 2024, but its status since April has been “indefinitely postponed.”

Nebraska  hosts Telcoin Bank, an issuer of the eUSD stablecoin. Telcoin was chartered as the state’s first Digital Asset Depository Institution in February, after applying in December. Telcoin founder and CEO Paul Neuner said, “The Nebraska charter creates an actual bank charter and the first that is explicitly authorized to connect consumers to DeFi [decentralized finance].”

The concept of Digital Asset Depository Institution was  introduced  in the Nebraska Financial Innovation Act of 2021. That law  established  a regulatory framework for digital asset depositories and allowed existing state-chartered banks to operate digital asset divisions. It also brought state legislation in line with the Uniform Commercial Code.

Nebraska was also one of the 18  states that sued  the Securities and Exchange Commission (SEC) and its then-chair Gary Gensler in November, alleging the agency and its head had shown “gross government overreach.”

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