Opinion by: Invoice Repasky, legal professional at Frost Brown Todd LLP
With greater than 55 million Individuals now utilizing cryptocurrency of their day by day lives, cryptocurrencies have change into an integral element of our nation’s monetary system.
Identical to conventional ATMs, tens of thousands of digital foreign money kiosks — often known as Bitcoin ATMs — have popped up in communities round america to help cryptocurrency transactions, from changing money into crypto to purchasing and promoting cash. The passage of the GENIUS Act could enlarge the general public’s demand for Bitcoin ATMs as stablecoins are launched.
Sadly, as with all new expertise, scammers have discovered learn how to use these instruments to commit fraud. Hoping to guard residents, some localities have responded by banning these kiosks altogether.
This isn’t a sensible or efficient answer — and it presents an actual risk to all customers and operators inside the cryptocurrency ecosystem.
Fortunately, there are higher, confirmed methods to fight crypto scams that protect this vital monetary infrastructure.
The rise of crypto ATM scams
Many crypto ATM scams contain persuasive criminals masquerading as authority figures, luring their victims into considering they should urgently hand over massive sums of cash by way of cryptocurrencies like Bitcoin to keep away from jail or another disaster. The FinCEN Notice of Aug. 4, 2025, FIN-2025-NTC1, explores frequent fraud schemes intimately.
These scammers trick weak individuals into changing fiat cash into cryptocurrency on the kiosks, usually instantly into the scammer’s pockets — an motion that’s irreversible and infrequently untraceable.
When introducing the Crypto ATM Fraud Prevention Act, for instance, Senator Dick Durbin relayed a narrative of a constituent who was tricked by a legal impersonating legislation enforcement into making a $15,000 deposit at a crypto ATM.
In response to the FBI’s 2024 Internet Crime Report, there have been greater than 10,956 complaints of crypto ATM fraud totaling $246.7 million in losses final yr — a 99% and 31% enhance from 2023, respectively. Whereas that is only a small element of the $12.5 billion shoppers misplaced to monetary fraud in 2024, it’s clearly a rising downside that must be addressed.
The issue with blanket bans
Spokane, Washington made waves when it banned crypto ATMs fully, a transfer the town council claimed would assist defend residents and stop fraud.
This technique is very similar to banning e-mail to eradicate phishing makes an attempt or prohibiting aged individuals from shopping for reward playing cards to maintain them from falling into the fingers of scammers.
Fraud is finally profitable as a result of it exploits human vulnerabilities, not due to anyone expertise. Banning crypto ATMs, somewhat than specializing in methods to mitigate the danger of scams, will simply lead victims to finish the fraudulent transaction in different methods.
Sensible options for minimizing fraud
Intercepting the rip-off on the level when a sufferer is about to finish the transaction is usually a more practical answer — which means crypto ATMs generally is a key instrument for stopping fraud. This includes warning customers that they need to not have interaction in transactions with individuals posing as legislation enforcement or different trusted people. It might probably additionally imply informing customers that cryptocurrency transactions can’t be reversed and are sometimes untraceable. Suppliers also can supply tailor-made warnings of bizarre exercise primarily based on consumer profiles.
Associated: Crypto ATM limits and bans sweep across US: Here’s why
A majority of these interventions have confirmed profitable with different kinds of monetary fraud, like wire transfers and even common ATM withdrawals. Respected crypto ATM operators are already staying abreast of the most recent scams and consumer preferences, utilizing their experience to implement efficient fraud prevention ways whereas nonetheless serving prospects’ banking wants.
State regulators also can play an important position, making licensure for crypto ATMs conditional on implementing efficient fraud warning guidelines and protocols for consumer interactions. These uniformly enforced laws will compel operators to compete for enterprise by offering a superior consumer expertise, somewhat than compromising on security.
Some legislators are even taking this strategy proactively, earlier than locals encounter fraud. For instance, the city of Grosse Pointe Farms, Michigan preemptively put in place registration and warning necessities on crypto ATMs (regardless that there aren’t any within the city but), which the town council said would supply “a little bit little bit of assist” and transparency for residents, particularly those that could be unfamiliar with cryptocurrency or unaware of frequent scams.
Defending shoppers, unleashing innovation
Blanket bans on digital foreign money kiosks won’t ever resolve the age-old fraud downside. Scammers will discover different methods to succeed in their victims, however the hundreds of thousands of cryptocurrency customers across the nation will lose entry to this vital monetary infrastructure.
As an alternative, involved regulators ought to encourage ATM operators to leverage confirmed fraud prevention strategies to interrupt fraudsters and defend potential victims from making a mistake. These instruments supply a wiser strategy, one which each protects shoppers and preserves the thrilling prospects of cryptocurrency.
Opinion by: Invoice Repasky, legal professional at Frost Brown Todd LLP.
This text is for common data functions and isn’t meant to be and shouldn’t be taken as authorized or funding recommendation. The views, ideas, and opinions expressed listed below are the creator’s alone and don’t essentially replicate or symbolize the views and opinions of Cointelegraph.
