States Intensify Regulations on Crypto ATMs Amid Rising Scam Concerns
July 30, 2025 — Lawmakers across the United States, representing both major political parties, are increasingly introducing and passing regulations aimed at curbing fraud related to cryptocurrency ATMs. These kiosks, which enable customers to use cash or debit cards to purchase cryptocurrencies and send them directly to digital wallets, have come under scrutiny due to a surge in scams, particularly those targeting seniors.
The Rise of Crypto ATM Scams
Crypto ATMs are commonly located in accessible venues such as gas stations, grocery stores, and convenience stores. Marketed as convenient and private portals for buying digital assets, these machines have unfortunately become tools for scammers. Fraudsters often deceive unsuspecting customers—frequently older adults—into sending substantial sums of money to wallets controlled by criminals, with transactions that cannot be reversed once processed.
Rhode Island Senator Victoria Gu, whose state recently enacted cryptocurrency regulations, highlighted the scale of losses reported by local law enforcement: “Folks had been losing $15,000 in one day … or someone had lost $40,000 over two days." She further explained that senior centers in her area saw widespread targeting, with many individuals either victims themselves or knowing someone who had been defrauded.
The AARP has noted that in 2023, an alarming 65% of funds lost via crypto kiosk fraud came from victims aged 60 and older. The organization advocates for stronger consumer protections, given that fraud safeguards for crypto ATM users typically lag behind those for traditional banking customers.
Bipartisan Legislative Action
Reflecting a bipartisan recognition of the problem, legislation regulating crypto ATMs has been enacted this year in at least ten states including Arizona, Arkansas, Colorado, Iowa, Maine, Maryland, Nebraska, North Dakota, Oklahoma, and Rhode Island. This builds on regulatory efforts in other states adopted in previous years.
In Wisconsin, Democratic Representatives Ryan Spaude and Kelda Roys have recently introduced a bill aiming to thwart scams and mitigate losses. They note an explosive growth in crypto ATM numbers—rising from a few thousand to over 30,000 kiosks statewide—without commensurate regulation. Roys characterized the current environment as a “wild west situation,” with kiosks operating as money transmitters yet evading typical regulatory oversight.
Common Scam Tactics
Scammers exploit familiar deceptive methods adapted to new technology. A frequently used tactic involves imposters posing as law enforcement or IRS officials, coercing victims to transfer funds via crypto ATM to avoid legal repercussions. Other stories include fraudsters masquerading as tech support warning of identity theft, or fabricating emergencies involving loved ones, to convince victims to use the machines repeatedly.
Senator Gu commented on this technological learning curve: “Because [crypto ATM] operators have been able to operate outside the scope of regulation, that has really meant that they are incredibly useful for criminals and scammers.” Importantly, unlike traditional credit card fraud, cryptocurrency transactions are irreversible, exacerbating victim losses.
Industry Response and Regulatory Measures
While some industry representatives argue that concerns about crypto ATM fraud are exaggerated—citing higher fraud rates with credit and debit cards—state regulators are pressing forward with measures to protect consumers. Spokane, Washington, went so far as to ban crypto ATMs outright, whereas Vermont implemented a moratorium and new regulations in 2024. Most state laws avoid bans, instead imposing practical safeguards including:
- Daily transaction limits to limit maximum potential losses per individual. Wisconsin proposes a $1,000 cap, while Oklahoma permits $2,000 for new customers only.
- Mandatory posting of notices at kiosks warning of fraud risks.
- Licensing requirements obligating operators to comply with state money transmitter laws.
- Provision of transaction receipts that include recipient wallet addresses for transparency.
- Customer service availability during kiosk operating hours.
- Assigning staff for regulatory compliance.
Additionally, many states require operators to refund customers who fall victim to fraud under defined circumstances. Definitions of “new customer” vary, with Rhode Island considering individuals new within 30 days of their first transaction and Oklahoma within 72 hours. Wisconsin’s legislation notably does not differentiate between new and returning customers, reflecting a concern for victims of prolonged scams such as romance fraud.
Legislation in Oklahoma and Wisconsin also addresses fee caps, since some crypto ATM operators charge fees as high as 19%, described by lawmakers as predatory. Oklahoma limits fees to 15%, while Wisconsin proposes a cap of 3% or $5, whichever is greater.
Controversies and Federal Perspectives
Not all regulatory efforts are universally welcomed. Oklahoma Governor Kevin Stitt vetoed his state’s bill, criticizing it as an unwarranted intrusion conflicting with free-market principles. However, state legislatures in some cases have overridden such vetoes.
On the federal level, Illinois Senator Richard Durbin introduced legislation in February aiming to harmonize regulations by pre-empting conflicting state rules while allowing states to impose additional protections. Under the federal bill, defrauded new customers would receive refunds for both transactions and associated fees, while protections for repeat victims are also contemplated.
As cryptocurrencies continue to embed themselves into everyday financial services, emerging regulations seek to navigate the balance between innovation and consumer protection. With scammers adapting age-old tricks to new digital formats, legislative safeguards around crypto ATMs aim to reduce harm, particularly among some of the most vulnerable populations.