Crypto fraud is on the rise; new laws in the Midwest seek stronger consumer protections

In a single year’s time, reported losses nationwide from cryptocurrency fraud jumped 66 percent, up to $9.3 billion in 2024, and the total number of complaints more than doubled, to nearly 150,000, according to the FBI.

One example of this type of fraud: Scammers who use cryptocurrency ATMs (physical machines or kiosks increasingly seen in grocery stores, gas stations and other retail establishments) as a way to steal money from victims, who most often are individuals over the age of 60. The victim is convinced of the need to deposit money in the cryptocurrency ATM; the money is lost to the scammer.

The goal of recently enacted laws in the Midwest is to add protections for consumers.

Nebraska’s LB 609 establishes licensing and reporting requirements for cryptocurrency ATM operators, who must now refund victims of fraud and provide disclosures and warnings to customers. Other new statutory provisions establish daily transaction caps ($2,000 for new customers, $10,000 for existing ones) and limit fees to 18 percent of the transaction. A similar law in Iowa, SF 449, took effect in July. Compared to the Nebraska measure, it sets a lower daily transaction limit for new customers ($1,000) and a tighter limit on transaction fees (no more than 15 percent).

North Dakota’s HB 1447 and Illinois’ SB 2319, both of which passed this year, also create new regulations for crypto ATMs.

Other common types of cryptocurrency fraud involve extortion and investment scams, the FBI notes in its “2024 Internet Crime Report.”

A second new law in Illinois, SB 1797, establishes general state-level regulatory oversight of cryptocurrencies and other digital assets. According to the Illinois Department of Financial and Professional Regulation, with this new law in place, the state can provide consumer protections in line with those that already apply to traditional financial services.