For many entrepreneurs and businesses, the rise of the crypto ATM once signaled a new frontier for digital currency adoption. These kiosks offered an accessible gateway into the cryptocurrency world. However, a significant shift is now underway across the United States. Regulators are increasingly scrutinizing crypto ATM operations. This growing pushback stems from serious concerns about fraud and illicit activities. Consequently, cities and states are implementing strict limits or even outright bans on these machines. This article explores the critical reasons behind these sweeping regulatory changes and their impact on the crypto landscape.
Understanding the Pushback Against Crypto ATM Operations
Initially, crypto ATM kiosks were seen as a convenient tool. They allowed users to buy or convert digital assets easily. However, their anonymity has made them a preferred channel for criminal activity. Lawmakers and critics consistently highlight numerous cases where these machines facilitate fraud. The Federal Bureau of Investigation (FBI) has reported a significant increase in money related to criminal activity flowing through crypto ATMs. In 2024 alone, the FBI received nearly 11,000 complaints. These fraud cases linked to crypto kiosks totaled over $246 million. This alarming trend underscores the urgent need for regulatory action.
Consequently, some cities have introduced complete bans on these machines. Furthermore, several states have begun to implement specific limits on their operations. These measures aim to protect consumers and prevent financial crimes. The regulatory landscape for crypto ATMs is rapidly evolving. Therefore, operators must adapt to new compliance requirements. The focus is clearly on enhancing user safety and transaction transparency.
Municipal Bans: Local Responses to Crypto ATM Fraud
Local governments are often the first to react to immediate threats. Many cities have taken decisive action against crypto ATMs. These bans typically follow specific incidents of fraud impacting local residents.
Stillwater, Minnesota: A Community Takes Action
In mid-May, the city of Stillwater, Minnesota, banned crypto kiosks. This decision followed a particularly distressing incident. A senior citizen was defrauded of over $5,000. Law enforcement explained the scam to local media. “Someone called her and told her she had a $20,000 ‘overpayment’ to her PayPal account,” police stated. “They told her to drive to her bank … and withdraw $20,000.” Since 2023, Stillwater police reported 31 fraud cases involving crypto ATMs. One victim, also a senior, lost $29,000. Stillwater has only 20,000 residents. Police indicated limited resources for complex fraud cases. Thus, a ban became an effective preventative measure.
Spokane, Washington: Removing All Crypto ATM Locations
Spokane banned crypto ATMs on June 17. This action directly responded to a surge in scam activity using these machines. City council member Paul Dillon emphasized the problem. “These kiosks have become a preferred tool for scammers looking to defraud unsuspecting victims,” he said. The ban prevents future kiosks from operating. More importantly, it mandates the removal of all existing crypto ATM locations within the city. This comprehensive approach highlights the severity of the issue.
Grosse Pointe Farms, Michigan: Proactive Limits on Crypto ATM Use
Grosse Pointe Farms, a small town near Detroit, has also introduced limits. This town will implement a $1,000 daily transaction cap. Furthermore, a $5,000 aggregate limit applies over a 14-day period. This decision was largely preemptive. The town currently hosts no crypto ATMs. The city council cited concern for resident welfare. They stated, “The operation of virtual currency kiosks … if not properly regulated, provides a heightened risk of fraudulent transactions that may victimize residents.” This proactive stance shows growing awareness of potential risks.
Crypto ATMs in Detroit. Source: Coin ATM Radar
State-Level Regulations: A Patchwork of Crypto ATM Controls
Beyond municipal actions, many states are enacting their own comprehensive laws. These state-level regulations often set daily transaction limits and mandate specific consumer protections. This creates a diverse regulatory environment for crypto ATM operators across the country.
Arizona: Cautious Regulation for Crypto ATM Transactions
Arizona Governor Katie Hobbs adopted a more cautious approach. She signed a bill regulating crypto ATMs into law. However, she vetoed measures that would establish a state crypto reserve. On May 12, Hobbs approved House Bill 2387. This bill stipulates several key provisions:
- $2,000 per day transaction limit for new users.
- $10,500 per day for returning users after 10 days.
- New user refund within 30 days in case of fraud, including fees.
These rules aim to balance innovation with consumer protection. They acknowledge the utility of crypto ATMs while mitigating risks.
Arkansas: Protecting Consumers from Crypto ATM Scams
Following consumer fraud cases, Arkansas enacted a law in May. State Attorney General Tim Griffin issued an official warning. He reported that in 2024, his office “received complaints from consumers totaling more than $400,000 in lost money in cryptocurrency kiosk scams.” The new law includes several provisions:
- $2,000 per day transaction limit for new users.
- Warnings must be prominently displayed on the machines.
- New user refund within 14 days in case of fraud, including fees.
- Operators must obtain user identification.
- Operators must contact registered senior citizens before their first transaction.
This comprehensive approach targets specific vulnerabilities. It aims to prevent future financial losses for residents using a crypto ATM.
Colorado: Instituting Controls for Crypto ATM Operations
In early June, Colorado instituted controls for crypto ATMs. This action came amid a rising number of scams. Amy Nofziger, director of victim support for AARP’s Fraud Watch Network, spoke to Colorado press. “The amount of fraud that is happening via these crypto ATM machines is huge,” she stated. “We’re hearing it across the country, but it’s really affecting Colorado consumers.” The law includes requirements like:
- $2,000 per day transaction limit for new users.
- Operators must refund transactions if crypto transfers to a wallet outside the country.
- Proof of transaction/receipt must be provided.
These measures enhance transparency and accountability. They protect consumers from cross-border fraud using a crypto ATM.
Iowa: Taking Hard Measures Against Crypto ATM Operators
Iowa has adopted a very strict stance against crypto ATMs. A law regulating crypto kiosks passed on July 1. Furthermore, Attorney General Brenna Bird filed a lawsuit. This lawsuit targets the two largest cryptocurrency ATM operators in Iowa: Bitcoin Depot and CoinFlip.
Iowa Attorney General Brenna Bird has launched a campaign against crypto ATM scams. Source: Iowa Attorney General
Bird strongly criticized the operators. “[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,” she asserted. The new law requires:
- $1,000 per day transaction limit for new users.
- Fees cannot exceed 15% of the transaction value.
- Warnings must be prominently displayed.
- Operators must provide reports on consumer protection practices to state authorities.
Iowa’s aggressive approach sets a precedent. It demonstrates a commitment to consumer safety in crypto ATM transactions.
Maine: Legislating Control Over Crypto ATM Kiosks
On June 10, Maine unanimously passed legislation. This new law aims to control cryptocurrency kiosks. State Senator Chip Curry highlighted the problem. “Crypto ATM scams aren’t isolated incidents,” he said. “They’re part of a growing pattern of international criminal networks targeting Maine and preying on our most vulnerable citizens.” The new law imposes several requirements:
- $1,000 per day transaction limit for new users.
- Operators must register as money transmitters in Maine.
- Transaction fees cannot exceed $5 or 3% of the transaction value.
- Operators must guarantee refunds for victims of fraud.
- They must prohibit asking customers to waive their rights.
Maine’s comprehensive bill protects its citizens. It also sets clear boundaries for crypto ATM businesses.
Maryland: New Law Regulates Crypto ATM Operations
On July 1, a new law came into effect in Maryland. This law regulates crypto kiosks. It responds to a wave of crypto ATM scam reports. Victims of these scams have sued Bitcoin ATM operator Athena Bitcoin. They allege elder abuse. They claim operators purposefully place kiosks in neighborhoods with many low-income and senior residents. The new law requires:
- $2,000 per day transaction limit for new users.
- Operators must register with the Commissioner of Financial Regulation.
- Transaction fees cannot exceed $5 or 15% of the transaction value.
- Operators must collect user identification, including name, date of birth, and address.
- Warnings must be prominently displayed.
Maryland’s law addresses specific concerns. It aims to prevent exploitation through crypto ATMs.
Minnesota: Joint Efforts to Regulate Crypto ATM Transactions
In Minnesota, the Department of Commerce, Financial Institutions, and Enforcement Divisions now regulates crypto kiosks. This law is a joint effort. It involves lawmakers, law enforcement agencies, and the AARP. The legislation requires:
- $2,000 per day transaction limit for new users.
- New user refund within 14 days in case of fraud, including fees.
- Warnings must be prominently displayed.
- Operators must disclose terms and conditions.
This collaborative approach underscores the widespread concern. It particularly focuses on protecting vulnerable populations from crypto ATM scams.
Scammers often target senior citizens. This demographic is typically less familiar with electronic payments, including cryptocurrencies. FBI statistics confirm this vulnerability. The largest portion of crypto ATM fraud is directed at senior citizens (over 60 years of age). Therefore, regulations often include specific protections for this group.
The vast majority of crypto ATM fraud was directed at senior citizens. Source: FBI
North Dakota: Protecting Residents from Crypto ATM Scams
North Dakota passed House Bill 1447 on March 18. Its goal is protecting residents from scams. It lays out a number of requirements:
- $2,000 per day transaction limit.
- Warnings must be prominently displayed.
- Operators must register as money transmitters.
- Operators must monitor kiosks for suspicious activity.
- Operators must provide quarterly reports on locations, including user names and transaction data.
These rules enhance oversight and accountability. They ensure safer crypto ATM operations within the state.
Nebraska: Building Trust in Crypto ATM Services
Nebraska Governor Jim Pillen signed a bill into law on March 12. This bill regulates crypto ATMs. He stated that the state has been “working hard to build Nebraska into a cryptocurrency leader.” However, he added, “an important part of these efforts is to make sure that we have guardrails to prevent criminals from taking advantage of Nebraskans.” The bill requires:
- $2,000 per day limit for new users.
- $5,000 per day for existing customers.
- Fees cannot exceed 18% of the transaction value.
- New user refund within 90 days in case of fraud, including fees.
Nebraska aims to foster innovation while ensuring consumer safety. These regulations build trust in crypto ATM services.
Oklahoma: Overriding Veto for Crypto ATM Regulation
Oklahoma passed a bill in May to regulate crypto ATMs. The AARP lauded Senate Bill 1083. Oklahoma Governor Kevin Stitt initially vetoed it. However, both houses successfully overrode the veto. The bill was filed with the secretary of state and became law. It takes effect November 1 and stipulates:
- $2,000 daily transaction limit for new users.
- New user refund in case of fraud.
- Operators must register with the Oklahoma Banking Department.
- Operators must use blockchain analytics to prevent asset purchases from going to wallets associated with criminal activity.
Oklahoma’s determination highlights the broad consensus on regulating crypto ATMs.
Rhode Island: The Crypto ATM Fraud Prevention Act
Rhode Island passed a law regulating crypto ATMs on August 11. It is titled the Crypto ATM Fraud Prevention Act. Rhode Island Senate Artificial Intelligence & Emerging Technologies Committee Chairwoman Victoria Gu commented. “Crypto ATMs are unfortunately an increasingly common way for criminals to get away with their ill-gotten gains,” she said. “Without increased regulation, this trend will only accelerate.” The bill includes measures such as:
- $2,000 per day transaction limits for new users.
- New user refund within 90 days in case of fraud, including fees.
- Operators are required to make statutory disclosures.
- Warnings must be prominently displayed.
This act demonstrates Rhode Island’s commitment to consumer protection. It addresses the rising tide of fraud through crypto ATMs.
Vermont: Slowing Down Victimization Through Crypto ATM Rules
In May 2024, Vermont passed H.659. This bill regulates crypto ATMs. Aaron Ferenc, deputy banking commissioner at the Department of Financial Regulation, explained its purpose. He told local media that the bill was to “slow down the speeds at which people are being victimized.” The law includes familiar provisions, including:
- $2,000 daily transaction limit for new users.
- Kiosks must register with the Commissioner of Financial Regulation.
- Refund rights for new users.
Vermont’s approach focuses on reducing the immediate impact of scams. It aims to protect individuals using a crypto ATM.
Wisconsin: Licensing and KYC for Crypto ATM Operators
On August 13, the Wisconsin State Senate introduced a bill. This bill requires crypto ATM kiosk operators to obtain a money transmitting license. They must also collect Know Your Customer (KYC) data. This includes users’ names, addresses, and dates of birth. Users will be capped at $1,000 worth of transactions per day. Machines will also have to display a warning. This warning highlights the possibility of crypto ATMs being used for fraud.
An example of a warning text included in the bill. Source: Wisconsin Legislature
This bill follows an identical one filed in the State Assembly. This common tactic increases the likelihood of the bill becoming law. It also speeds up the legislative process. Wisconsin is proactively addressing the risks associated with crypto ATMs.
Future Outlook: Potential Nationwide Crypto ATM Restrictions
The number of states imposing strict regulations on crypto ATMs continues to grow. Concerns from senior rights groups and consumer protection watchdogs are intensifying. Senior citizens comprise a large percentage of Iowa’s and Maine’s populations. This demographic is particularly vulnerable to crypto ATM scams. Both states have enacted strict laws. These laws include low daily withdrawal limits and rigorous licensing and reporting requirements.
Lawmakers in Washington are now considering a bill. This bill would impose regulations on crypto ATMs at a national level. Many proposed measures are similar to those already appearing in various states. This indicates a potential shift towards a more unified regulatory framework. The crackdown on crypto ATMs has already stifled the industry’s growth. New license and ID requirements, along with commission caps, could severely impact profitability for many crypto ATM operators. This evolving landscape demands careful navigation for all stakeholders.
Frequently Asked Questions (FAQs)
What is a crypto ATM?
A crypto ATM, or cryptocurrency automatic teller machine, allows users to buy or sell cryptocurrencies like Bitcoin and Ethereum using cash or debit cards. These machines typically convert fiat currency into digital assets or vice versa, providing a physical access point to the crypto market.
Why are crypto ATMs facing bans and limits in the US?
Crypto ATMs are facing increased scrutiny due to their use in facilitating fraud, money laundering, and other illicit activities. Regulators and law enforcement, including the FBI, report a significant rise in scams where victims are directed to use these machines. This has led to local and state-level legislative actions to protect consumers.
Which states have implemented new regulations on crypto ATMs?
Many US states have enacted new laws regulating crypto ATMs. These include Arizona, Arkansas, Colorado, Iowa, Maine, Maryland, Minnesota, Nebraska, North Dakota, Oklahoma, Rhode Island, Vermont, and Wisconsin. Each state has specific provisions, often involving transaction limits, ID requirements, fee caps, and fraud warnings.
What are common features of new crypto ATM regulations?
New regulations for crypto ATMs commonly include daily transaction limits for new and returning users, mandatory user identification (KYC), requirements for operators to register as money transmitters, prominent display of fraud warnings, and provisions for refunds in cases of fraud. Some states also cap transaction fees and require operators to report on consumer protection practices.
How do these regulations impact crypto ATM operators?
These new regulations significantly impact crypto ATM operators. They face increased compliance costs due to licensing, reporting, and KYC requirements. Daily transaction limits and fee caps can also reduce profitability. Some operators may find it challenging to continue operating under these stricter conditions, potentially leading to a reduction in the number of kiosks.
Are senior citizens particularly vulnerable to crypto ATM scams?
Yes, senior citizens are disproportionately targeted by crypto ATM scams. FBI statistics show that the largest portion of crypto ATM fraud complaints comes from individuals over 60 years of age. Scammers often exploit their unfamiliarity with digital currencies and sophisticated electronic payment methods, coercing them into transferring funds via these machines.
