North Dakota Crypto Regulations: A Comprehensive Guide

North Dakota lacks standalone crypto law. Businesses transmitting digital assets likely require a money transmitter license under ND Century Code Title 13, Chapter 13-08. State tax treatment aligns with federal guidance.

Quick Answer: North Dakota's Stance on Crypto

North Dakota lacks comprehensive, standalone cryptocurrency legislation. The state applies existing financial laws, primarily money transmission statutes, to crypto businesses whose activities fit established legal definitions.

Key agencies include the North Dakota Department of Financial Institutions (NDDFI), which oversees licensing for money transmitters, potentially including virtual currency exchanges and custodians. The North Dakota Attorney General handles consumer fraud and enforcement under general consumer protection statutes.

North Dakota conforms to federal income tax treatment. IRS Notice 2014-21 and Rev. Rul. 2019-24, classifying virtual currency as property, establish the framework for state returns. No separate state crypto tax ruling overrides or supplements this.

Individual investors' crypto tax obligations largely mirror federal ones. Crypto businesses must first address money transmitter licensing before operating.

Licensing Requirements for Crypto Businesses in North Dakota

The Money Transmitter Act and Crypto

North Dakota's money transmitter framework is found in ND Century Code, Title 13, Chapter 13-08. The statute requires a license for "money transmission," defined to include receiving money or monetary value for transmission, selling or issuing payment instruments, and related activities.

The NDDFI interprets whether a crypto business activity falls within this definition. Exchanges accepting fiat currency and transmitting value in cryptocurrency, custodians holding digital assets for customers, and certain wallet providers controlling customer funds are categories most likely to trigger licensing obligations. Platforms holding or moving customer funds, even temporarily, should assume the statute applies absent a written NDDFI determination.

What "Monetary Value" Means Here

The statute uses "monetary value" rather than explicitly defining "virtual currency" or "digital asset." The NDDFI interprets monetary value broadly enough to capture convertible virtual currencies—cryptocurrencies with equivalent value in real currency or acting as a substitute for it. Consult the NDDFI directly for a formal interpretation of your specific business model.

Exemptions and Thresholds

ND Century Code Chapter 13-08 includes exemptions for entities like banks and federally chartered institutions. No published de minimis volume threshold exempts small crypto businesses. Consult the NDDFI for current exemption determinations and written guidance on specific transaction volumes.

Application, Bonding, and Ongoing Compliance

To obtain a money transmitter license in North Dakota, applicants submit through the Nationwide Multistate Licensing System (NMLS). Requirements include:

• A surety bond (consult the NDDFI for the current schedule, as amounts vary based on transaction volume)
• Background checks for principals and control persons
• Financial statements demonstrating adequate net worth
• A description of the business model and transaction types

Once licensed, businesses must maintain permissible investments sufficient to cover outstanding transmission obligations, file periodic reports with the NDDFI, and submit to examination. Report any material change in business model, ownership, or digital asset types handled to the NDDFI promptly.

North Dakota's Approach to Crypto Taxation

Federal Conformity and What It Means for ND Residents

North Dakota's individual income tax is based on federal adjusted gross income (AGI), as established under ND Century Code, Title 57. Because the state starts with federal AGI, federal cryptocurrency treatment under IRS Notice 2014-21 and Rev. Rul. 2019-24 flows directly into your North Dakota return without a separate state-level calculation.

This means:

• Capital gains and losses from selling, trading, or spending cryptocurrency are reported federally and carry into your ND return at the same amounts.
• Ordinary income from airdrops, hard forks, staking rewards, and mining is taxed at fair market value on the date of receipt at the federal level, and that income appears in your ND taxable income automatically.
• Short-term vs. long-term capital gain distinctions that apply federally also apply to your ND return, as ND taxes net capital gains as part of ordinary income.

The North Dakota Office of State Tax Commissioner has not published standalone guidance specifically addressing cryptocurrency gains, losses, or mining income. For state-specific questions, consult the Office of State Tax Commissioner directly.

Sales Tax on Crypto Transactions

North Dakota imposes a sales tax under ND Century Code, Title 57, Chapter 57-39.2. The state has not issued a specific ruling or regulation explicitly taxing or exempting cryptocurrency transactions. North Dakota sales tax applies to tangible personal property and enumerated services. As an intangible asset, cryptocurrency does not fit the tangible property category. However, if a business accepts crypto as payment for goods or services, the underlying transaction remains subject to sales tax based on the fair market value of the item sold. The crypto itself is not the taxable item.

For businesses providing crypto-related services, taxability depends on how the service is classified under ND sales tax law. Consult the Office of State Tax Commissioner for a ruling on your specific service type.

Form 1099-DA and State Filing Impact

Starting with the 2025 tax year (forms issued in early 2026), centralized exchanges must issue Form 1099-DA to users and the IRS under new broker reporting rules. This form reports digital asset proceeds and improves cost-basis tracking. For North Dakota filers, the IRS will have more data on crypto activity, and state returns, which start with federal AGI, will reflect federal reporting. Underreporting federally creates state tax exposure.

Keep records of every acquisition, including date, cost basis, and fair market value at the time of any disposition. North Dakota does not impose a separate cost-basis methodology beyond federal mandates.

Key Definitions and Legal Classifications of Digital Assets in ND

What ND Statutes Actually Say

North Dakota's statutes do not currently contain an explicit statutory definition of "virtual currency," "digital asset," or "cryptocurrency" in any chapter of the ND Century Code that applies broadly to financial regulation. The state has not enacted a Digital Asset Act or similar framework adopted by other states.

The NDDFI applies existing definitions within ND Century Code, Title 13, Chapter 13-08, particularly "monetary value" and "payment instrument," to determine whether a crypto activity falls under money transmission. This represents an interpretive approach, not a codified definition.

Utility Tokens, Security Tokens, and Payment Tokens

Token type distinctions determine regulatory jurisdiction:

The North Dakota Securities Department, under the NDDFI umbrella, applies the Howey test (the federal standard for what constitutes a security) to determine whether a token offering requires registration under ND Century Code, Title 10, Chapter 10-04 (the North Dakota Securities Act). Token issuance is a separate and parallel analysis from money transmission licensing.

Federal Classifications and State Deference

North Dakota agencies generally defer to federal classifications from the SEC and CFTC when determining how to treat a particular digital asset. If the SEC classifies a token as a security, the ND Securities Department will treat it as such. If the CFTC treats Bitcoin and Ether as commodities, that classification informs how ND regulators approach those assets. While no formal ND statute codifies this deference, it reflects current agency practice.

Consumer Protections and Anti-Fraud Measures in ND

General Consumer Protection Law Applied to Crypto

North Dakota's primary consumer protection statute is ND Century Code, Title 51, Chapter 51-15, the Consumer Fraud Act. It prohibits deceptive acts or practices in connection with the sale or advertisement of merchandise. The Attorney General has interpreted "merchandise" broadly enough to include financial products and services. Crypto investment schemes, fraudulent exchange platforms, and misleading token offerings can all fall under this statute.

The Attorney General's Role

The North Dakota Attorney General's office investigates and prosecutes consumer fraud, including crypto-related scams. The Attorney General can seek civil penalties, restitution, and injunctive relief under Chapter 51-15. Criminal referrals for wire fraud and related offenses go to federal prosecutors.

Reporting Suspicious Activity

If you encounter a suspected crypto scam in North Dakota:

• File a complaint with the North Dakota Attorney General's Consumer Protection Division at ag.nd.gov
• Report to the FTC at reportfraud.ftc.gov
• Report to the FBI's Internet Crime Complaint Center (IC3) at ic3.gov
• If securities fraud is involved, contact the North Dakota Securities Department through the NDDFI

Consumers who have lost funds to a crypto scam should also promptly contact a private attorney, as recovery options narrow quickly.

Federal Tax Considerations

Cryptocurrency is treated as property for federal tax purposes, as established in IRS Notice 2014-21. This means that transactions involving crypto can result in capital gains or losses, depending on the holding period.

• IRS Notice 2014-21 clarifies that cryptocurrencies are considered property, not currency, impacting how gains and losses are reported.
• Capital gains and losses on crypto dispositions are determined by the holding period: short-term (held for one year or less) is taxed at ordinary income rates, while long-term (held for more than one year) benefits from lower capital gains rates.
• Form 1099-DA will be required for digital asset brokers starting in tax year 2025, mandating reporting of gross proceeds from crypto transactions.
• The wash-sale rule under IRC § 1091 does not currently apply to cryptocurrencies, allowing for potential tax-loss harvesting without restrictions.
• Income from mining or staking is treated as ordinary income, reported at fair market value at the time of receipt.

This is not tax advice — consult a CPA familiar with Crypto for your specific situation.

Frequently Asked Questions

Why doesn't North Dakota have specific cryptocurrency regulations?

North Dakota relies on existing financial laws, particularly the money transmitter statutes, to regulate cryptocurrency activities rather than establishing standalone legislation.

What federal laws apply to cryptocurrency in North Dakota?

The IRS classifies virtual currency as property under federal tax law, which North Dakota conforms to, meaning residents must follow federal guidelines for crypto taxation.

Are there any active legislative proposals regarding crypto in North Dakota?

As of now, there are no known active legislative proposals specifically targeting cryptocurrency regulations in North Dakota.

What do crypto businesses in North Dakota do given the lack of specific state law?

Crypto businesses typically comply with the state's money transmitter licensing requirements and follow federal regulations, seeking guidance from the North Dakota Department of Financial Institutions.

How does North Dakota's approach to crypto compare to neighboring states?

North Dakota's approach is more restrictive, as it applies existing financial laws without specific crypto legislation, while some neighboring states may have more defined frameworks for cryptocurrency businesses.

Next Steps: Who to Contact for Guidance and Licensing

North Dakota Department of Financial Institutions (NDDFI)

For money transmitter licensing questions, interpretation of whether your business model requires a license, and ongoing compliance obligations:

North Dakota Department of Financial Institutions 2000 Schafer Street, Suite G, Bismarck, ND 58501 Phone: (701) 328-9933 Website: nd.gov/dfi

Submit licensing applications through the Nationwide Multistate Licensing System (NMLS) at nmlsconsumeraccess.org. The NDDFI can provide written guidance on whether a specific crypto business activity triggers licensing; obtaining this determination before launch is advisable.

North Dakota Office of State Tax Commissioner

For questions about how cryptocurrency gains, losses, mining income, or business receipts are treated for state income or sales tax purposes:

North Dakota Office of State Tax Commissioner 600 E. Boulevard Ave., Bismarck, ND 58505 Phone: (701) 328-7088 Website: tax.nd.gov

Request a private letter ruling if you have a specific transaction or business structure that needs a definitive state tax answer.

Legal and Tax Professionals

Given the interpretive nature of ND's crypto regulations, businesses require legal and tax professionals with direct experience in digital asset law. The State Bar Association of North Dakota (sband.org) can provide referrals.

Staying Current

North Dakota's legislature meets biennially. Monitor the North Dakota Legislative Assembly website (legis.nd.gov) for bills related to digital assets, blockchain, or money transmission during each session. Sign up for NDDFI bulletins and follow the North Dakota Attorney General's consumer alert page for enforcement updates. Federal regulatory changes from the SEC, CFTC, and IRS will continue to shape state agency interpretations, making federal development tracking essential.