Crypto kiosks or automatic teller machines (ATMs) are facing increasing pushback from US regulators amid concerns about fraud and crime.
Once seen as a bellwether of crypto adoption, crypto ATMs, which allow users to buy or convert crypto anonymously, are increasingly under lawmakers’ microscope. Critics and regulators have flagged numerous cases in which the machines are used to commit or facilitate illicit activity.
The Federal Bureau of Investigation (FBI) has noted an increasing amount of money related to criminal activity going through crypto ATMs. In 2024, the FBI received nearly 11,000 complaints of fraud cases at crypto kiosks, valuing over $246 million.
Some cities have introduced outright bans on crypto ATMs, and a handful of states are beginning to introduce limits on their activities.
Stillwater, Minnesota
In mid-May, the government of the city of Stillwater, Minnesota banned crypto kiosks after a senior citizen was defrauded of over $5,000.
Law enforcement told local media, “Someone called her and told her she had a $20,000 ‘overpayment’ to her PayPal account … They told her to drive to her bank (Royal Credit Union in Oak Park Heights) and withdraw $20,000.”
Local police reported 31 fraud cases through crypto ATMs since 2023, with one victim, also a senior citizen, losing $29,000. The city of Stillwater has just 20,000 residents.
Stillwater police said that it has limited resources to pursue these increasingly sophisticated cases, and that a ban would be an effective measure.
Spokane, Washington
Spokane banned crypto ATMs on June 17 in response to a surge in scam activity using the machines.
City council member Paul Dillon said, “These kiosks have become a preferred tool for scammers looking to defraud unsuspecting victims.”
The ban will not just prevent future kiosks from operating in the city but will also remove current ATM locations.
Grosse Pointe Farms, Michigan
A small town just outside of Detroit has also introduced limits on crypto kiosks. Grosse Pointe Farms will implement a $1,000 daily transaction cap and $5,000 aggregate limit over a 14-day period.
The decision was seen as preemptive, considering the town doesn’t host any crypto ATMs.
As for why, the city council cited concern over resident welfare, stating, “The operation of virtual currency kiosks … if not properly regulated, provides a heightened risk of fraudulent transactions that may victimize residents.”
Arizona
Arizona Governor Katie Hobbs has offered a more cautious approach to crypto regulation in her state, signing a bill into law that regulates crypto ATMs while vetoing measures that would establish a state crypto reserve. On May 12, Hobbs approved House Bill 2387, which stipulates:
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$2,000 per day transaction limit for new users
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$10,500 per day for returning users after 10 days
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New user refund in 30 days in case of fraud, including fees.
Arkansas
Following several cases of consumer fraud and an official warning from the state Attorney General Tim Griffin, Arkansas enacted a law regulating crypto ATMs in May. Griffin said that in 2024 alone, his office “received complaints from consumers totaling more than $400,000 in lost money in cryptocurrency kiosk scams.”
The law includes several provisions:
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$2,000 per day transaction limit for new users
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Warnings must be prominently displayed
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New user refund in 14 days in case of fraud, including fees
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Operators must obtain user identification
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Operators must contact registered users who are senior citizens before they make their first transaction.
Colorado
In early June, the state of Colorado instituted controls for crypto ATMs amid a rising number of scams.
Amy Nofziger, director of victim support for the American Association of Retired Persons’ (AARP) Fraud Watch Network, told Colorado press, “The amount of fraud that is happening via these crypto ATM machines is huge … We’re hearing it across the country, but it’s really affecting Colorado consumers.”
The law includes requirements like:
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$2,000 per day transaction limit for new users
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Operators must refund transactions if crypto is transferred to a wallet outside the country
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Proof of transaction/receipt.
Iowa
The state of Iowa has taken hard measures against crypto ATMs. Not only did it pass a law on July 1 regulating crypto kiosks, but Attorney General Brenna Bird has also filed a lawsuit against the two largest cryptocurrency ATM operators in Iowa: Bitcoin Depot and CoinFlip.
“[Scammers] convince these older women that they need help, and then send their victims to crypto ATMs. And the crypto ATM companies take a cut of the profits. It’s not just wrong, it’s illegal,” said Bird.
The law requires:
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$1,000 per day transaction limit for new users
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Fees cannot exceed 15% of the transaction value
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Warnings must be prominently displayed
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Operators must provide reports…
cointelegraph.com