July 30, 2025
5 min read
https://www.governing.com/jule-pattison-gordon
States enact bipartisan laws to protect consumers from crypto ATM scams, requiring refunds, warnings, and transaction limits.
Fearing Scams, States Add Regulations to Crypto ATMs
Legislators across the political spectrum are moving to regulate cryptocurrency ATMs, kiosks that let customers purchase crypto and send it to digital wallets. These machines, often found in gas stations, grocery stores, and convenience stores, allow users to buy cryptocurrency with cash or debit cards. While marketed as a convenient and private way to acquire digital assets, many reports reveal scammers tricking victims—especially seniors—into sending large sums to fraudulent wallets. Because cryptocurrency transactions are irreversible, victims often lose their money permanently. Rhode Island Senator Victoria Gu, who sponsored recent crypto ATM regulation, highlights local police reports of thefts reaching $15,000 in a single day or $40,000 over two days. She notes that older adults are frequently targeted: "When I visited our local senior center, it seemed like everyone had been targeted with some sort of scam or knew someone who’d been." The AARP reports that in 2023, 65% of crypto kiosk fraud losses were suffered by victims aged 60 and older. The organization advocates for stronger consumer protections, noting that crypto ATMs currently face fewer regulations than banks.Bipartisan Legislative Action
This year, nearly a dozen states have passed laws imposing anti-fraud measures on crypto ATM operators. These include Arizona, Arkansas, Colorado, Iowa, Maine, Maryland, Nebraska, North Dakota, Oklahoma, and Rhode Island, among others. Some states had already enacted similar rules in previous years. Wisconsin lawmakers recently introduced legislation to address the rapid growth of crypto ATMs—now numbering over 30,000 statewide—and the "wild west situation" where kiosks operate like money transmitters but lack regulation. Law enforcement agencies have raised alarms about the scams. Iowa’s attorney general sued two major crypto ATM companies for failing to protect customers from scams that cost Iowans over $20 million in under three years, while the companies profited from fees of 21-23%.New Twists on Old Scams
Common scams involve fraudsters impersonating law enforcement or IRS agents, demanding victims send cryptocurrency to avoid legal trouble. Others pose as tech support, loved ones in distress, or romantic interests, coaxing victims into repeated transactions. Although these scams are not new, the use of crypto ATMs introduces new risks and challenges. Wisconsin Senator Kelda Roys explains, "Anytime there's a novel technology, there's a learning curve as people adjust and realize what the risks are. Because these operators have been able to operate outside the scope of regulation, crypto ATMs are incredibly useful for criminals and scammers." Unlike credit card fraud, cryptocurrency transactions cannot be reversed, making prevention and regulation critical. Some industry representatives argue the fraud risk is overstated. David Tente, executive director for ATMIA, says, "There’s actually more fraud with credit and debit cards. The scams have existed for decades; they just use different payment methods."Crafting Effective Regulations
Some jurisdictions have taken stronger stances. Spokane, Washington, banned crypto ATMs outright, while Vermont imposed a moratorium and new regulations in 2024. Most states, however, focus on targeted rules rather than bans. Common regulatory measures include daily transaction limits—ranging from $1,000 in Wisconsin to $2,000 for new customers in Oklahoma—to limit potential losses and alert victims to suspicious activity. Operators are often required to post clear warnings about scam risks and provide transaction receipts that include recipient wallet addresses. Licensing requirements as money transmitters and staffed customer service lines during kiosk operation hours are also common. Many new laws mandate refunds for fraudulent transactions under certain conditions, especially for new customers (e.g., within 30 days in Rhode Island or 72 hours in Oklahoma). Wisconsin’s bill extends refunds to all customers, addressing repeated scams like romance fraud. Fee caps are another focus. Some crypto ATMs charge fees as high as 19% or more, which lawmakers like Wisconsin’s Roys and Oklahoma’s Mark Lepak call predatory. Oklahoma caps fees at 15%, while Wisconsin limits them to 3% or $5, whichever is greater. Lepak emphasizes the burden these fees place on scam victims pressured to use the kiosks. Opposition exists, including from Oklahoma Governor Kevin Stitt, who vetoed the state’s bill citing excessive regulation, though the legislature overrode his veto.Federal Attention
At the federal level, Illinois Senator Richard Durbin introduced legislation to standardize crypto ATM regulations across states, requiring refunds for defrauded new customers and fee refunds for repeat victims. The bill also mandates verbal confirmation via live video or phone call for transactions over $500 by new customers.Source: Governing.com — Originally published July 30, 2025