Sweeping Crypto ATM Crackdown: US States Impose Urgent Limits and Bans

The landscape of cryptocurrency adoption is shifting dramatically in the United States. Once hailed as a symbol of mainstream crypto integration, the crypto ATM now faces intense scrutiny. Regulators are increasingly imposing strict limits and even outright bans. This crucial change reflects growing concerns about fraud and illicit activities facilitated by these machines. Understanding this evolving regulatory environment is essential for anyone interested in digital assets.

The Alarming Rise of Crypto ATM Scams

Law enforcement agencies across the nation report a significant surge in criminal activity linked to crypto ATM scams. The Federal Bureau of Investigation (FBI) notes a troubling increase in funds related to illicit operations passing through these kiosks. In 2024 alone, the FBI recorded nearly 11,000 complaints of fraud cases at crypto kiosks. These cases collectively totaled over $246 million in losses. This alarming trend underscores the urgent need for intervention.

Scammers often target vulnerable individuals, especially senior citizens. These victims typically possess less familiarity with electronic payment methods, including cryptocurrencies. According to FBI statistics, the largest portion of crypto ATM fraud specifically targets individuals over 60 years of age. Criminals frequently use deceptive tactics, such as impersonating government officials or tech support, to coerce victims into making transactions. They instruct victims to deposit cash into a Bitcoin ATM, then transfer the funds to a scammer-controlled wallet. This method exploits trust and technical unfamiliarity.

The vast majority of crypto ATM fraud was directed at senior citizens. Source: FBI

Local Crackdowns: Cities Enforce Crypto ATM Bans

Several municipalities have taken decisive action against crypto ATMs, implementing bans or strict limitations. These local measures often stem from specific fraud incidents affecting their communities. City officials prioritize resident protection, especially for vulnerable populations. Such local initiatives often serve as precedents for broader state-level actions.

Stillwater, Minnesota Takes Action

In mid-May, the city government of Stillwater, Minnesota, banned crypto kiosks. This decision followed a senior citizen being defrauded of over $5,000. Law enforcement officials explained how a scammer convinced the victim to withdraw a large sum. They then directed her to a crypto ATM. Stillwater police reported 31 fraud cases involving crypto ATMs since 2023, with one senior citizen losing $29,000. With limited resources to pursue these increasingly sophisticated cases, city police deemed a ban an effective preventative measure. Stillwater, with only 20,000 residents, saw a disproportionate number of incidents.

Spokane, Washington Implements Ban

Spokane banned crypto ATMs on June 17, responding to a surge in scam activity using the machines. City council member Paul Dillon stated, “These kiosks have become a preferred tool for scammers looking to defraud unsuspecting victims.” This ban will not only prevent new kiosks from operating but also require the removal of existing ATM locations. This comprehensive approach aims to eliminate a primary avenue for local scams.

Grosse Pointe Farms, Michigan Sets Limits

A small town near Detroit, Grosse Pointe Farms, also introduced limits on crypto kiosks. The town will implement a $1,000 daily transaction cap and a $5,000 aggregate limit over a 14-day period. This decision was proactive, as the town currently hosts no crypto ATMs. The city council cited concern for resident welfare, stating, “The operation of virtual currency kiosks…if not properly regulated, provides a heightened risk of fraudulent transactions that may victimize residents.” This preemptive strike highlights a growing trend of cautious regulation.

Crypto ATMs in Detroit. Source: Coin ATM Radar

State-Level Crypto ATM Regulations Emerge

Beyond municipal bans, numerous states are introducing comprehensive US crypto ATM laws. These regulations aim to protect consumers while attempting to balance innovation with safety. Common provisions include transaction limits, identification requirements, and mandatory fraud warnings. Each state tailors its approach, reflecting unique local concerns and legislative priorities.

Arizona’s Cautious Approach

Arizona Governor Katie Hobbs adopted a more cautious approach to crypto regulation. She signed House Bill 2387 into law on May 12, regulating crypto ATMs. However, she vetoed measures that would establish a state crypto reserve. The new law stipulates:

• $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.

Arkansas Combats Consumer Fraud

Following consumer fraud cases and an official warning from Attorney General Tim Griffin, Arkansas enacted a law regulating crypto ATMs in May. Griffin reported that his office received complaints totaling over $400,000 in lost money from crypto kiosk scams in 2024 alone. The law includes several provisions:

• $2,000 per day transaction limit for new users.
• Warnings must be prominently displayed.
• New user refund within 14 days in case of fraud, including fees.
• Operators must obtain user identification.
• Operators must contact registered users who are senior citizens before their first transaction.

Colorado Institutes Controls

In early June, Colorado instituted controls for crypto ATMs amidst rising scam numbers. 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:

• $2,000 per day transaction limit for new users.
• Operators must refund transactions if crypto is transferred to a wallet outside the country.
• Proof of transaction/receipt.

Iowa Takes Hard Measures

Iowa has taken stringent measures against crypto ATMs. On July 1, it passed a law regulating crypto kiosks. Furthermore, Attorney General Brenna Bird filed a lawsuit against the two largest cryptocurrency ATM operators in Iowa: Bitcoin Depot and CoinFlip. Bird stated, “[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.” The 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.

The state attorney general has launched a campaign against crypto ATM scams. Source: Iowa Attorney General

Maine Passes Unanimous Legislation

On June 10, Maine unanimously passed legislation to control cryptocurrency kiosks. State Senator Chip Curry highlighted that crypto ATM scams “aren’t isolated incidents. 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.
• Guarantee refunds for victims of fraud.
• Prohibit operators from asking customers to waive their rights.

Maryland’s New Regulations

On July 1, a new law in Maryland came into effect, regulating crypto kiosks. This action followed a wave of crypto ATM scam reports. Victims of crypto ATM scams in Maryland have sued Bitcoin ATM operator Athena Bitcoin for alleged elder abuse, claiming operators purposefully place kiosks in neighborhoods with a high number of 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.

Minnesota’s Joint Effort

In Minnesota, the Department of Commerce, Financial Institutions and Enforcement Divisions now regulates crypto kiosks. This law represents a joint effort among lawmakers, law enforcement agencies, and the AARP. It 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.

North Dakota Protects Residents

North Dakota passed House Bill 1447 on March 18, aiming to protect 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.

Nebraska Builds Guardrails

Nebraska Governor Jim Pillen signed a bill into law on March 12, regulating crypto ATMs. He stated that the state has been “working hard to build Nebraska into a cryptocurrency leader,” but emphasized that “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.

Oklahoma Overrides Veto

Oklahoma passed a bill in May to regulate crypto ATMs. Lauded by the AARP, Senate Bill 1083 was initially vetoed by Oklahoma Governor Kevin Stitt. However, both houses successfully overrode the veto. The bill was filed with the secretary of state and became law, taking effect November 1. It 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.

Rhode Island’s Prevention Act

Rhode Island passed a law regulating crypto ATMs on August 11, 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, and 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.

Vermont Aims to Slow Victimization

In May 2024, Vermont passed H.659 to regulate crypto ATMs. Aaron Ferenc, deputy banking commissioner at the Department of Financial Regulation, told local media that the bill aimed 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.

Wisconsin’s Licensing Requirements

On August 13, the Wisconsin State Senate introduced a bill requiring crypto kiosk operators to obtain a money transmitting license to operate in the state. Operators must also collect Know Your Customer (KYC) data about users, such as their name, address, and date of birth. Users will be capped at $1,000 worth of transactions per day. Machines will also have to display a warning about the possibility of crypto ATMs being used for fraud.

This bill follows an identical one filed in the State Assembly, the lower house of the state legislature. This common tactic increases the likelihood of the bill becoming law and speeds up the legislative process. These proposed changes represent significant steps toward greater oversight.

The Broader Impact on US Crypto ATM Operations

The increasing number of states imposing strict US crypto ATM laws signifies a major shift in the regulatory landscape. Concerns from senior rights groups and consumer protection watchdogs continue to mount. Senior citizens, for instance, constitute 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 with low daily limits on withdrawals and stringent licensing and reporting requirements. This targeted protection reflects a clear understanding of the risks involved.

In Washington, lawmakers are considering a bill that would impose regulations on crypto ATMs at a national level. Many proposed measures mirror those already appearing in various states. This potential federal oversight could standardize regulations across the country. Such a move would significantly impact the entire crypto ATM industry. The crackdown has indeed stymied the crypto kiosk business’s growth. New license and ID requirements, along with commission caps, could severely impact profitability for crypto ATM operators. Many smaller operators may find it difficult to comply with these escalating demands. Consequently, consolidation within the industry may occur, leading to fewer, larger players.

Navigating the Future of Bitcoin ATM Access

The evolving regulatory environment for Bitcoin ATM access reflects a complex balancing act. Regulators aim to protect consumers from fraud while acknowledging the potential for legitimate cryptocurrency use. The stringent measures discussed illustrate a clear priority on consumer safety. As a result, the days of anonymous, high-volume transactions at crypto kiosks appear to be drawing to a close. This shift necessitates greater transparency and accountability from operators.

Moving forward, crypto ATM operators must adapt to this new reality. Compliance with diverse state-specific regulations will become paramount. This includes implementing robust Know Your Customer (KYC) procedures and anti-money laundering (AML) protocols. Furthermore, clear and prominent warnings about potential scams will be crucial for user education. The industry’s future success hinges on its ability to integrate these protective measures effectively. Ultimately, responsible innovation will define the path forward for crypto ATM services in the United States, ensuring a safer environment for all users.