Lawmakers across multiple states are advancing legislation to regulate cryptocurrency ATMs to reduce fraud that has caused significant financial losses. Proposed bills will impose registration requirements, transaction limits, and fees on kiosk operators to protect consumers. Meanwhile, local authorities and AARP support these regulations, highlighting the need for safeguarding vulnerable populations, especially seniors, from crypto scams.
Bipartisan state lawmakers are introducing legislation to regulate cryptocurrency ATMs to combat fraud that has cost Americans billions of dollars. Proposed bills in at least 15 states would require operators to register with authorities, inform consumers of risks, and provide live customer service. These regulations aim to protect the public from increased fraud schemes associated with cryptocurrency usage.
The legislation includes daily transaction limits, generally capped at $1,000, and fees restricted to $5 or between 3 to 15 percent of the transaction amount. Law enforcement indicates a significant rise in cryptocurrency fraud, with the FBI reporting losses of about $5.6 billion in 2023, a 45 percent increase from the previous year.
Maryland Sen. Pamela Beidle’s proposal includes raising transaction limits to $2,000 daily and mandating the collection of users’ personal information. Kiosks must also display warnings about cryptocurrency investment risks. Beidle cited a constituent’s loss of $3,500 due to a fraudulent scheme using a spoofed phone number to appear legitimate.
Legislation in North Dakota has passed to limit first-time payments to $2,000, while similar bills are proposed in Arizona and Hawaii. New Jersey introduces the strictest bill aimed at completely banning crypto kiosks, imposing hefty fines on violators.
Industry representatives aim to collaborate with lawmakers to develop a balanced regulatory framework that deters fraud while preserving user access to cryptocurrency. Peter Herzog from the Crypto Council for Innovation has expressed concerns about a complete ban disrupting financial markets and preventing user access.
Local law enforcement supports regulations, claiming that unregulated kiosks facilitate illicit activities. Westerly Police Chief Paul Gingerella noted that organised efforts often result in non-cooperation from kiosk operators. AARP backs many bills, citing concerns for elderly victims; nearly half of reported crypto kiosk complaints originate from individuals over 60.
Rhode Island’s bill requires operators to submit quarterly reports and disclose risks. Florida, Illinois, and Massachusetts legislation mandates blockchain analytics usage to curb fraud, while Colorado’s version emphasizes refunds for fraudulent transactions.
The cryptocurrency market is valued at approximately $3.3 trillion, with one in six Americans reporting involvement in cryptocurrency activities. The surging value of Bitcoin to nearly $100,000 has led to a soaring number of scams, with criminal activity increasing at an annual rate of 24 percent according to Chainalysis.
Few states have established regulations for crypto kiosks. Vermont has implemented registration requirements for kiosk operators, while some state banking regulators maintain that existing ATM laws do not encompass crypto kiosks, necessitating new legislation to address evolving financial technologies.
