Once hailed as a tangible sign of cryptocurrency’s march into the mainstream, crypto kiosks, or Bitcoin ATMs, are now facing a severe regulatory backlash across the United States. Concerns over their use in fraud and other criminal activities have prompted a wave of bans and stringent new rules from city councils to state legislatures, casting a shadow over the future of these machines.
The core of the issue lies in the anonymous nature of many crypto ATM transactions, which allows users to buy or convert digital currencies with cash. This feature, once seen as a boon for accessibility, is now being exploited by criminals. Regulators and critics point to a growing number of cases where these machines have become instrumental in perpetrating and facilitating illicit schemes.
The Federal Bureau of Investigation (FBI) has highlighted a disturbing trend, noting a significant increase in criminal funds being funneled through crypto ATMs. In 2024 alone, the agency received nearly 11,000 complaints related to fraud at these kiosks, with victims losing over $246 million. A significant portion of these scams are directed at senior citizens, who may be less familiar with digital currencies and more susceptible to coercion.
Cities Take a Stand with Outright Bans
In response to rising fraud, some municipalities have opted for a complete prohibition of crypto ATMs.
In mid-May, Stillwater, Minnesota, a city of just 20,000 residents, banned the machines after a senior citizen was conned out of more than $5,000. This was not an isolated incident; local police reported 31 crypto ATM-related fraud cases since 2023, including one victim who lost $29,000. With limited resources to combat increasingly sophisticated scams, city officials deemed a ban the most effective solution.
Similarly, Spokane, Washington, outlawed crypto ATMs on June 17, with City Council Member Paul Dillon stating, “These kiosks have become a preferred tool for scammers looking to defraud unsuspecting victims.” The ban not only prevents new installations but also mandates the removal of existing machines.
Even towns without a single crypto ATM are taking preemptive action. Grosse Pointe Farms, Michigan, a suburb of Detroit, introduced a $1,000 daily transaction cap and a $5,000 limit over a 14-day period. The city council cited a proactive concern for resident welfare, noting that unregulated kiosks present “a heightened risk of fraudulent transactions.”
States Roll Out a Patchwork of Regulations
A growing number of states are implementing new laws to govern the operation of crypto ATMs, creating a complex regulatory landscape for operators.
Arizona: Governor Katie Hobbs signed House Bill 2387 into law on May 12, establishing a $2,000 daily transaction limit for new users and $10,500 for returning customers. The law also mandates a 30-day refund window for new users who are victims of fraud.
Arkansas: Prompted by consumer fraud cases totaling over $400,000 in losses in 2024, the state enacted a law in May. It includes a $2,000 daily limit for new users, requires prominent warning displays, mandates operator-held user identification, and even requires operators to contact new senior citizen users before their first transaction.
Colorado: In early June, Colorado introduced controls including a $2,000 daily new-user limit and a requirement for operators to refund transactions if the crypto is sent to a wallet outside the country. Amy Nofziger of the AARP’s Fraud Watch Network highlighted the scale of the problem, stating, “The amount of fraud that is happening via these crypto ATM machines is huge… it’s really affecting Colorado consumers.”
Iowa: Taking a firm stance, Iowa not only passed a law on July 1 with a $1,000 daily limit and a 15% cap on fees but also saw its Attorney General, Brenna Bird, sue the two largest operators in the state, Bitcoin Depot and CoinFlip. Bird accused the companies of profiting from scams targeting older women.
Maine: Lawmakers unanimously passed legislation on June 10, imposing a $1,000 daily limit for new users and capping fees at the lower of $5 or 3% of the transaction value. The law also requires operators to register as money transmitters and guarantee refunds for fraud victims.
Maryland: A new law that took effect on July 1 requires operators to register with the state, collect user identification, and display warnings. This follows lawsuits against an operator for alleged elder abuse, claiming machines were deliberately placed in areas with high concentrations of low-income and elderly residents.
Minnesota: The state now regulates crypto kiosks with a law that includes a $2,000 daily new-user limit, a 14-day refund period for fraud victims, and mandatory display of warnings and terms of service.
Nebraska: A law signed on March 12 sets a $2,000 daily limit for new users and $5,000 for existing ones, with an 18% cap on fees. Governor Jim Pillen emphasized the need for “guardrails to prevent criminals from taking advantage of Nebraskans.”
North Dakota: House Bill 1447, passed on March 18, institutes a $2,000 daily limit and requires operators to register as money transmitters, monitor for suspicious activity, and submit quarterly reports with user and transaction data.
Oklahoma: Overriding a gubernatorial veto, the state legislature passed a bill effective November 1. It sets a $2,000 daily limit for new users, mandates fraud refunds, and requires operators to use blockchain analytics to block transactions to criminally-associated wallets.
Rhode Island: The “Crypto ATM Fraud Prevention Act,” passed on August 11, establishes a $2,000 daily limit for new users and a 90-day refund period for fraud victims.
Vermont: A May 2024 law aims to “slow down the speeds at which people are being victimized” with a $2,000 daily new-user limit and refund rights.
Wisconsin: A bill introduced on August 13 proposes a $1,000 daily transaction cap and requires operators to obtain a money transmitter license and collect customer data like name, address, and date of birth.
A National Crackdown on the Horizon?
The proliferation of state-level regulations, driven by advocacy from senior rights groups and consumer watchdogs, points toward a potential nationwide response. The fact that states with large senior populations, such as Iowa and Maine, have enacted some of the strictest laws underscores the focus on protecting vulnerable demographics.
In Washington, lawmakers are now considering a federal bill that would mirror many of the regulations already being implemented by the states. This growing regulatory pressure is beginning to stifle the growth of the crypto kiosk industry. New licensing requirements, identification protocols, and caps on transaction fees threaten the profitability of operators, potentially signaling the end of an era for what was once a key pillar of crypto’s public-facing infrastructure.
